Monday will ring in a brand-new trading month, a prospect that appeals to many after a doozy of a last session in October.
A fresh test of this year’s technology rally sent the Nasdaq composite on Friday to its biggest decline since June. Chipmaker Intel and social media firm Reddit fell 29% and Sandisk, a chipmaker that has been one of the great beneficiaries of the AI capital-spending boom, dropped 13%.
Friday’s selloff came after a bruising for the big tech firms at the center of the AI buildout, led by Microsoft, Meta Platforms, Amazon and Google parent Alphabet. Their shares dropped 1% to 2% on Friday following significant declines earlier in the week.
The four so-called hyperscalers have been collectively responsible for more than a third of all the capital spending undertaken by the current constituents of the S&P 500 over the past 12 months, Capital Economics said, adding that their share seems likely to rise to an even higher level – a prospect that investors are struggling with.
“Now that the combined capital spending boom at the hyperscalers is becoming partly dependent on external financing, investors are becoming more nervous about the sums they are collectively investing and how they are doing it,” said John Higgins, a markets economist at Capital Economics.