Tech Stocks Slide as Nvidia Warns of AI Funding Constraints
Major stock indices dropped in New York as investors grew anxious over capital limitations and rising oil prices.
United States stock indices suffered sharp declines on Thursday, driven by investor anxiety over artificial intelligence funding constraints and rising global energy costs. The tech-heavy Nasdaq 100 index fell 1.5 percent in New York trading, while the S&P 500 dropped nearly 1 percent as markets grappled with the financial sustainability of the ongoing technology boom.
The market sell-off followed cautious remarks from Jensen Huang, chief executive of Nvidia, who warned that a scarcity of working capital is currently hindering the broader rollout and expansion of artificial intelligence infrastructure. Speaking to CNBC, Huang noted that while demand from neocloud providers offering cloud-based storage is exceptionally high, the necessary financial capital to fuel this rapid growth is severely limited.
The demand for capital is much greater than the availability of capital, Huang explained, though he expressed confidence that the funding imbalance will eventually be resolved. Major technology corporations are adjusting their financial strategies amid these headwinds, contributing to broader sector volatility.
Meta shares dropped 5 percent after company leadership announced plans to increase its capital expenditure lower bound from $130 billion to $135 billion, alongside issuing new non-voting stock to support further artificial intelligence investments despite lingering shareholder skepticism. Meanwhile, Tesla shares slid 2 percent after Elon Musk's enterprise reduced its proposed artificial intelligence spending from $25 billion to $20 billion.
Compounding the downward pressure on Wall Street, surging oil prices intensified investor concerns regarding global economic stability. Brent crude climbed past $112 per barrel for the first time since May, triggered by escalating geopolitical tensions in the Middle East.
In Saudi Arabia, state-owned oil giant Saudi Aramco evacuated staff from its primary headquarters in Dhahran and instructed more than 30,000 employees to work remotely after warning alarms sounded amid renewed regional threats. Although the energy ministry reported that recent Houthi strikes targeting the Shaybah oil field did not impact production, the mounting energy crisis pushed Brent crude up by 2.5 percent to close at $111.60 per barrel.
In separate corporate developments within the technology sector, Schaumburg-based software provider Paylocity introduced a new artificial intelligence recruiting optimizer designed to automate hiring workflows. The tool aims to enhance recruiter productivity and streamline talent acquisition processes through embedded artificial intelligence agents while keeping human operators in control of final decisions.