Nasdaq 100 Enters Correction as AI Spending Fears Wipe $1 Trillion From Big Tech

A broad reassessment of artificial intelligence investment is hammering US tech stocks, with the Nasdaq 100 briefly falling into correction territory as investors question whether surging AI capital expenditure will ever produce commensurate returns. The tech-heavy index dropped 2.9% on Friday and sits roughly 7.8% below its all-time high, erasing around $1 trillion in market value, as earnings from Amazon, Alphabet and others reignited fears about runaway spending without proportionate revenue growth.

Five of the largest US technology companies are collectively on track to spend roughly $828 billion on AI infrastructure this year, a figure that banks including Evercore and Bank of America project could reach $1 trillion in 2027. The gap between that outlay and what those companies generate from operations is widening fast enough to affect shareholder returns directly, with Alphabet reporting two consecutive quarters of negative free cash flow for the first time on record and Meta also disclosing negative free cash flow in its most recent quarter.

OpenAI slashed its fundraising target by $10 billion against this backdrop, in what ZeroHedge described as "almost a down round," as the broader AI stock selloff and rival Anthropic's impending public listing complicated efforts to secure investor commitments. The reduction, reported by the Financial Times, underscores how quickly sentiment has shifted toward demanding proof of returns rather than rewarding ambition alone.

Investors rotated back into bonds after an extended sell-off, trimming growth bets as concern mounted over the US economy's concentrated exposure to tech and AI spending. Taiwan Semiconductor was identified by analysts as one of the clearest structural beneficiaries of the build-out regardless of which software players ultimately win. ServiceNow's CFO pushed back against the narrative that AI disrupts enterprise software, arguing the threat is overstated, while Bandwidth reported enterprise wins and AI-driven momentum in its third quarter. Accenture shares were judged fairly valued following fresh AI launch news, and Sandisk's strategic shift toward AI storage was flagged as more significant than its headline earnings figure.