AI Spending Spree Triggers Market Retreat

Meta Platforms led the retreat with a 7% decline after investors scrutinized the company's aggressive data-center investment strategy. The pressure extended to the semiconductor sector, where Lam Research warned of persistent supply shortages despite high demand. This report triggered a broader selloff in Asian markets, impacting major suppliers like Samsung and SK Hynix, while Nvidia shares dropped more than 4% and the PHLX Semiconductor Sector index fell 6.7%.

Lorenzo Di Mattia, founder of Sibilla Capital, noted that the current AI landscape departs from the high-margin, low-capital model of traditional software. Companies now face massive computing bills and heavy spending on hardware with no clear finish line in sight. This tension is particularly visible among 'neocloud' firms like CoreWeave, which saw its shares fall 10% amid concerns over the scale of its data-center borrowing. Oracle shares also declined by 3% as the market continues to weigh the sustainability of this capital-intensive expansion. While some bulls argue that growth potential remains high, voices like Citadel CEO Ken Griffin have labeled the current trend an AI bubble.