Stock futures slip after AI spending worries drive Nasdaq's worst day since June
US stock futures edged lower on Friday after a sharp sell-off in technology shares. On Thursday the Nasdaq Composite fell 2.6%, its worst day since June, as Meta's spending on artificial intelligence (AI) unsettled investors.
Meta's spending shock
Meta said it now expects full-year capital spending of $135bn to $145bn, raising the bottom of the range from $130bn, CNBC reported. Free cash flow came in at negative $2.12bn for the quarter.
The company also said it would create a new class of nonvoting Class C shares. Meta said the move would keep its "founder-led structure" and "provide Meta the ability to finance its growth".
Revenue rose 26% from a year earlier to $64.60bn, ahead of the $63.37bn analysts expected. The spread on Meta's five-year credit default swaps, a measure of the cost of insuring its debt, reached an all-time high on Thursday.
A broad sell-off in tech
The S&P 500 fell 1.2% on Thursday, its worst session since July. The Dow closed slightly higher. US tech stocks fell 3% as a group, CNBC said.
| Stock or index | Thursday move |
|---|---|
| Nasdaq Composite | -2.6% |
| S&P 500 | -1.2% |
| Meta | about -7% |
| Advanced Micro Devices | -8.1% |
| Nvidia | -4.4% |
| Alphabet | -3.2% |
| CoreWeave | -10% |
| Philadelphia Semiconductor Index | -6.7% |
Capital is the worry
Nvidia chief executive Jensen Huang told CNBC on Thursday that money for the AI build-out was becoming harder to find.
There's a scarcity of capital. The demand [for] the capital is much greater than the availability of the capital.
Ed Yardeni of Yardeni Research called the AI trade a "bubble". But he said "taking some air out of the AI bubble is a good thing" and did not expect it to burst.
What to watch on Friday
Chip stocks were rebounding slightly early on Friday, with Micron and Nvidia higher. Microsoft and Meta were lower again, CNBC reported.
For the week, the S&P 500 was on track for a small gain, while the Nasdaq was down 0.5%.
