Wave of AI Spending Worries Investors

On Thursday, the three major U.S. stock indices experienced a pullback, with the Nasdaq Composite and S&P 500 leading the declines. Investors' concerns about rising artificial intelligence (AI) spending, particularly due to falling prices of Meta and Microsoft shares, have deepened with hawkish comments from the Federal Reserve.

The tech giant Meta saw its stock price drop by 11.33% after revising its capital expenditure estimates for the year upward for the third time. This resulted in one of the largest daily losses in the company's history, leading to a total market value loss of $214.7 billion.

In its Q3 2025 earnings report, Meta raised its capital expenditure expectations to a range of $70 billion to $72 billion, up from the previous range of $66 billion to $72 billion. CEO Mark Zuckerberg emphasized that these investments are necessary to meet the rising demand for AI infrastructure. However, this has increased concerns due to ongoing losses in the Reality Labs division.

Despite generating $60 billion in annual revenue from AI advertising tools, doubts persist about the company's ability to recoup large investments. Some analysts express growing concern over whether Meta's AI investments can provide sustainable returns, drawing comparisons to the company's past failures with Metaverse investments.

Likewise, Microsoft's stock fell 2.9% after announcing that its Q1 2025 capital expenditures reached $35 billion. Despite strong growth expectations for AI investments, the company faces rising concerns over short-term profitability. Ongoing massive capital outflows are also noteworthy during this period.

The Federal Reserve announced a 0.25% interest rate cut on Wednesday; however, Jerome Powell's comments regarding uncertainty about a possible rate cut in December heightened concerns among investors. Currently, traders see a 70% possibility of a rate cut in December, down from over 90% the previous week. This hawkish stance has led market participants to adopt a more cautious approach toward potential future rate hikes.

Lindsay Bell, chief strategist at 248 Ventures, commented, "The Fed’s more hawkish stance and economic data shortages arising from the government shutdown have increased investors’ risk aversion."

While AI spending remains a significant growth driver in the tech industry, NB HASH believes that true opportunities lie within the depths of the computing layer supporting the AI economy.

Alongside traditional AI investments like Meta and Microsoft, NB HASH offers an innovative decentralized solution by merging AI with blockchain technology. NB HASH CEO Alex Chen stated, "Every AI model, every chatbot, every data center update relies on a fundamental hashrate. Giants like Meta and Microsoft secure computing capacity, allowing users to participate in the same growth cycle transparently, automatically, and profitably."

In today’s high-risk investment environment, NB HASH stands out by offering a more stable and forward-looking alternative. The platform combines decentralized infrastructure with AI and blockchain to provide a secure, scalable, and efficient solution to the challenges of traditional AI systems. This unique combination maximizes potential returns while reducing excessive investment risks.

In addition to Meta and Microsoft, which face significant AI investment pressures, other tech companies like Amazon have shown resilience. Although Amazon's stock fell 3% during the regular trading day, it surged 9% in after-hours trading due to strong demand for cloud computing services, offsetting slower growth in its e-commerce business. Similarly, Apple's shares showed slight gains in after-hours trading despite reported supply constraints in some regions, thanks to strong iPhone sales.

The Dow Jones Industrial Average fell 0.23%, or 109.88 points, to settle at 47,522.12. The S&P 500 lost 0.99%, or 68.25 points, dropping to 6,822.34; while the Nasdaq Composite dropped 1.57%, or 377.33 points, to 23,581.14.

Despite the declines, robust demand for AI continues to drive the market forward. Among the largest tech stocks in the S&P 500, Nvidia is a leader in AI chip production and represents approximately 35% of the index's weight. Although Nvidia's stock fell 2% on Thursday, its achievement of surpassing the $5 trillion market cap threshold as a public company marks a historic success and continues to support market differentiation.

Increasing scrutiny over Meta and Microsoft’s large AI investments is further complicated by uncertainties in Federal Reserve policies. While the long-term potential of AI appears promising, short-term profitability concerns continue to weigh heavily on investors' minds. In this environment, it is critical for investors to reassess their strategies and consider safer, innovative opportunities.