Nasdaq falls 2.6% as investors question whether AI spending will pay off

The Nasdaq composite fell 694 points, or 2.6%, to 26,008.86 on Oct. 22, and the S&P 500 fell 1.2%, its worst day since July, the Associated Press reported. The Dow rose less than 0.1% because most U.S. stocks gained even as tech fell. CBS News reported the Nasdaq had been down 751 points shortly before the close.

Investors worried that huge AI investments will not deliver the profits expected and about the debt AI companies are taking on to build data centers, CBS reported. "Companies are reliant on the largess of equity and debt investors to underwrite all the spending," Adam Crisafulli of Vital Knowledge told CBS, adding that those markets are "becoming increasingly less accommodating." Meta fell 7% after its profit fell short of estimates, and Tesla slipped 3.1%, CBS reported.

Earlier in Asia, SoftBank fell 6.9% and Tokyo Electron 7% on worries that data center construction may slow as borrowing gets more expensive, the AP reported. A day before the sell off, the Daily Caller reported that S&P Global's Mark Habib said there is likely more AI related debt than is visible, and that S&P estimates Amazon, Microsoft, Alphabet, Oracle, Meta and SpaceX will spend more than $7 trillion on AI from 2025 through 2030. Oil also weighed on stocks, with Brent up about 3.7% to near $113, CBS reported.