AI spending concerns intensify, Nasdaq plunges
(Spot-market closing figures are for Thursday, 22 October, US Eastern time; futures data as of approximately 07:00 Singapore time on 23 October)

On Thursday, the S&P 500 fell 1.22% to 7662.54 points, its worst day since July; the Nasdaq fell 2.60% to 26008.86, its steepest decline since June; and the Dow was effectively flat, rising 0.02% to 52867.98. The equal-weight S&P ETF (RSP) bucked the trend, rising 0.73% (Wallstreetcn). The 10-year US Treasury yield closed at 4.95%, down about 19 basis points and below 5% for the first time since 2 September. The December WTI contract rose 2.39% to $​99.47, while Brent rose 4.00% to $​113.17, its highest settlement in five months. Spot gold fell 2.88% to $​4021.80 an ounce, its lowest since 3 August; the dollar index fell 0.17% to 101.608 (Wallstreetcn). US equity futures steadied slightly overnight: S&P 500 futures were around 7679 (+0.09%) and Nasdaq 100 futures around 28978 (+0.11%) (Finnhub).

Market theme
The week's biggest earnings report brought the question of who will pay for AI to the fore. Meta's third-quarter revenue beat expectations, but it raised its 2026 capital spending guidance to $​135 billion–145 billion, free cash flow turned negative, and total lease and contractual payment commitments over the coming years swelled from about $​700 billion to about $​825 billion. Its shares plunged nearly 7% and its five-year CDS hit a record high (Wallstreetcn, Reuters, via TradingView). Together with Lam Research's warning about supply-chain constraints, the Philadelphia Semiconductor Index slumped 6.72%, with all 30 constituents falling. Institutional strategy firm Vital Knowledge said the selloff extended a weeks-long reassessment of AI spending: capital markets are becoming more discerning about infrastructure investment funded by debt and equity. JPMorgan's Arun Jain noted that retail investors were already heavily invested in chip stocks before the selloff (institutional views, as reported). Nvidia CEO Jensen Huang told CNBC at GTC in Berlin on Thursday that neocloud demand was "off the charts" and that working capital, rather than customers, was in short supply (CNBC, as reported)—the debate has shifted from whether AI demand exists to who can afford to pay. Bloomberg macro strategist Michael Ball believes free cash flow will become a more important way to distinguish among tech stocks as financing costs rise; Goldman Sachs's Rich Privorotsky said every reduction in AI capital expenditure means less potential bond supply, with an effect similar to quantitative easing (Bloomberg/Goldman Sachs views, via Wallstreetcn). The result was a divided day: money moved out of heavyweight tech stocks and into defensive sectors, consumer staples rose 3.31%, Procter & Gamble gained 5.58%, and the equal-weight S&P had its best day relative to the broader index since July 2024. At the same time, escalation in the Middle East pushed oil prices higher and Europe's bond-market crisis intensified demand for safe havens; the 10-year Treasury yield fell 19 basis points below 5%. The Wall Street Journal's Thursday closing headline was equally direct: tech stocks fell on AI concerns (WSJ, headline confirmed).

One. AI highlights: Demand is "off the charts," but money is starting to run short

  • Meta plunged 6.98% after earnings to close at $​648.85 (Wallstreetcn, Finnhub). Q3 revenue was $​64.6 billion (+26%), beating expectations of $​63.34 billion. Reported EPS was $​3.83, including $​9.89 billion in settlement costs for adolescent mental health lawsuits; excluding those costs, core EPS was $​7.40, above the expected $​6.54. Q4 revenue guidance was $​73 billion–76 billion, with a midpoint of $​74.5 billion above expectations of about $​73.7 billion (Reuters, via TradingView). But the market was focused on the bill: 2026 capital expenditure guidance was raised from 130 billion–145 billion to 135 billion–145 billion; Q3 free cash flow turned negative at $​2.12 billion, versus +10.63 billion a year earlier; and future lease and contractual payment commitments were about $​825 billion, compared with about $​700 billion disclosed in July, mostly for AI computing capacity and infrastructure. Meta announced a 2-for-1 stock split and the creation of non-voting Class C shares in January 2027. ICE data showed its five-year CDS rose 8.9 basis points intraday to 119.3 basis points, an intraday high since the contract began trading; its corporate bonds also weakened relative to Treasuries (Wallstreetcn).
  • Neocloud providers offer the most direct comparison: CoreWeave closed down 10.06% at $​55.60, the yield on its 2030 bonds with a 9% coupon returned above 15%, and its CDS quotes remained above 1000 basis points—market pricing of AI infrastructure debt has begun to diverge from equity pricing (Wallstreetcn). Bernstein cut its price target from $​74 to $​51; Nebius fell 7.23% and Iren fell 8.37% (Yahoo Finance report, as relayed). JPMorgan estimates that most global banks have limited exposure to CoreWeave but warns that its free cash flow will remain negative until 2030; Goldman Sachs, by contrast, upgraded it to buy with a $​106 price target (JPMorgan/Goldman Sachs views, as reported).
  • Semiconductor equipment and optical communications led losses: Lam Research fell -11.76% to close at $​230.15, KLA fell -9.55%, and Applied Materials -8.16%; Coherent fell 12.51% and Lumentum 11.54%; Micron fell -6.26%, Seagate -7.86%, and Western Digital -6.43%, with Western Digital falling another more than 5% after reporting earnings after the close (Wallstreetcn). The Philadelphia Semiconductor Index fell 6.72%, its largest single-day percentage decline since 23 June (Reuters, via el7.ai). Research firm Bespoke calculated that memory stocks had fallen 41.6% from their peak, while a semiconductor industry ETF had lost 16% since 5 October and was down 20.3% from its all-time high in June (Bespoke, via Wallstreetcn).
  • Jensen Huang on capital: The Nvidia CEO said that day that demand for neocloud providers was extraordinarily high, but insufficient capital supply was constraining industry growth. Wells Fargo traders said in a report that his comments unsettled the market and reignited investor concerns about the credit market's capacity to absorb financing. Barclays' trading team said the recent semiconductor stock rebound looked more like a normal reversion to the mean after eight consecutive declines, while participation in the AI sector remained weak (Wallstreetcn).
  • Fundraising continues to accelerate: OpenAI is close to completing a new funding round of up to $​30 billion at a pre-money valuation of about $​1.25 trillion, led by UAE investors and Coatue. It aims to sign by the end of next week as an "opportunistic" bridge ahead of a 2027 IPO; the valuation is below the $​1.4 trillion offer Bloomberg reported earlier this month (CNBC, as reported, aidailypost). The Financial Times reported that Anthropic has agreed terms for about $​30 billion in funding at a valuation of about $​900 billion (FT, as reported). Morgan Stanley forecasts total AI investment of $​1.6 trillion in 2027 and $​1.8 trillion in 2028 (Reuters, via wtbx).

Two. Bonds, the dollar and commodities: European bond crisis and AI concerns; the 10-year Treasury yield plunges 19 basis points below 5%

  • The 10-year US Treasury yield closed at 4.95%, down about 19 basis points on the day, below 5% for the first time since 2 September and at its lowest in nearly a month. The 5-year yield fell about 21 basis points to 4.76%, while the 30-year yield fell about 15 basis points to 5.29%; short- and intermediate-dated bonds outperformed the long end (Wallstreetcn). Dow Jones Data Talk said the 10-year yield was quoted at 4.952% intraday (-19.3 basis points), its biggest single-day decline since 10 March 2023 (Dow Jones via Morningstar).
  • Two forces drove the Treasury rally. First was Europe's bond crisis: France's 10-year government bond yield rose to 5.076%, its highest since June 2002; the French-German spread briefly widened to 175 basis points, its widest since the 2011 European debt crisis; and France's 10-year yield rose above the US 10-year yield for the first time that day, having last done so in 2013. Second were concerns about AI growth prospects and a large short squeeze targeting CTA short positions (Wallstreetcn).
  • The dollar index fell 0.17% to 101.608 in late New York trading, having touched a three-week low intraday. Dollar/yen fell from 158.29 to 156.78, and the yen was among the day's strongest currencies (Wallstreetcn).
  • Oil reached its highest settlement in five months: Brent (ICE December contract) settled at $​113.17, up 4.00% ($​+4.35); WTI (NYMEX December contract) settled at $​99.47, up 2.39%, after touching $​100.17 intraday but failing to hold above the round-number threshold (Wallstreetcn).
  • Gold did not rise despite safe-haven sentiment: spot gold fell 2.88% to $​4021.80 an ounce, its lowest since 3 August; spot silver fell 5.87% to $​54.42 an ounce; and Bitcoin fell 3.30% to $​81250, giving back all of its prior-session gains (Wallstreetcn).

Three. Stocks and sectors, including earnings: Tech heavyweights fall as defensive sectors attract funds

  • Tesla fell 3.08% to close at $​374.58 (Finnhub). Q3 adjusted EPS was $​0.48 versus $​0.44 expected; revenue was $​28.05 billion, slightly below the expected $​28.13 billion; and adjusted EBITDA was $​3.9 billion, above the expected $​3.66 billion. Free cash flow unexpectedly turned positive at $​1.53 billion, as spending on AI and robotics was below expectations; Q3 capital expenditure was $​4.73 billion, far below the expected $​7.95 billion. Vehicle deliveries of 486.5 thousand exceeded expectations of 461.1 thousand (as reported). Investors, however, were more focused on increased spending on robots, Cybercab and Terafab in 2027–2028.
  • Amazon fell 4.57%, Nvidia fell 4.40%, and Google fell 3.15%. Apple rose 1.23%, the only Magnificent Seven stock to close higher: ample free cash flow and relatively restrained infrastructure spending attracted buyers during this round of capital reallocation (Wallstreetcn).
  • IBM fell as much as 5.7% in premarket trading but closed up 0.26% at $​252.11 (Finnhub). Adjusted EPS of $​2.95 and revenue of $​17.1 billion both beat expectations, but gross margin of 58.5% missed the expected 59.1%; CEO Krishna said some customers were beginning to question returns on AI investment (as reported). Texas Instruments fell 1.81% to close at $​279.50 (Finnhub).
  • SpaceX (SPCX) gave back Wednesday's gains, falling 9.14%. Netflix rose 3.09% to close at $​67.05, after falling 5.3% on Wednesday on weak Q4 guidance (market data compiled from multiple sources, Finnhub).
  • The data-center power supply chain was also affected: GE Vernova and Bloom Energy each fell more than 11%, Vistra fell more than 10%, and Quanta Services fell more than 8%. Moderna plunged as much as 26% after melanoma vaccine data leaked early, with results below expectations, and closed down 17.57% (CNBC, via edgeconsultancy, Wallstreetcn). Spotify rose 11.10% on improved margins; Musk invested about $​1 billion in Skydance (CNBC, via edgeconsultancy).
  • Sector performance diverged sharply: consumer staples +3.31%, utilities +2.07%, healthcare +1.32%, real estate +1.09%, and financials +1.09% led gains; technology -3.29% and communication services -1.42% lagged. Defensive leaders included Procter & Gamble +5.58%, Hershey +4.67%, Home Depot +4.33%, Johnson & Johnson +3.81%, Coca-Cola +2.88%, McDonald's +2.59%, and Nike +2.10% (Wallstreetcn). FBB Capital Partners research director Michael Bailey said the market saw a rotation that had occurred several times this year, only more sharply (Wallstreetcn).
  • Overseas markets: Nikkei -2.65%, Hang Seng -3.03%, South Korea's Kospi -3.52%, and Shanghai Composite -1.48%; Europe's Stoxx 600 fell 0.79% and the DAX fell 1.04% (cappnotes, edgeconsultancy).

Four. Geopolitics: Houthi attacks on a Saudi oil field and US evacuations; Brent breaks above $113

  • Over the past 48 hours, Houthi forces attacked Saudi Arabia's Yanbu port; a drone attack on Saudi Aramco's Shaybah oil field killed two people; and King Fahd International Airport in Dammam also suffered casualties. Iran's Islamic Revolutionary Guard Corps said it hit four oil tankers involved in the incident in the northern Persian Gulf, and a vessel struck a mine near the Strait of Hormuz. The US has ordered some embassy personnel and their families to leave Saudi Arabia (Wallstreetcn). The New York Times, citing US officials, reported that the US and Israel have drawn up plans for a new round of strikes on Iran after the midterm elections. The premium of physical Brent over nearby futures widened to $​10.83, while prompt Brent crude was quoted at $​123.885, indicating tighter physical supplies than futures prices suggest (Wallstreetcn).
  • Arne Lohmann Rasmussen, chief analyst at Global Risk Management, believes the escalation in the Middle East points to the midterm elections in two weeks: Iran has no interest in a peace deal with Trump before the election because keeping oil, gasoline and diesel prices high gives it leverage (Wallstreetcn).

Five. Forward calendar (Hong Kong/Singapore time)

  • 23 October (Fri): 21:45 US October S&P Global flash PMI (WSJ survey forecasts 55.3/58.0); 22:00 final University of Michigan consumer sentiment (forecast 46.3) (WSJ Data Week Ahead, via Morningstar); premarket earnings: American Express (AXP), SLB.
  • 26 October (Mon): Verizon (VZ) before the open; Cadence (CDNS) after the close.
  • 27 October (Tue): Conference Board consumer confidence at around 22:00 in the evening (US Eastern morning); earnings: Coca-Cola and Boeing before the open, Visa and Robinhood after the close.
  • 28 October (Wed): Fed FOMC decision at 02:00 early on 29 October (no dot plot this round); Reserve Bank of New Zealand decision at 09:00 (forecast to raise rates to 3.00%); Bank of Canada decision at 21:45; after-hours earnings (US Eastern 10-28): Microsoft, Alphabet, KLA.
  • 29 October (Thu): 20:30 US Q3 advance GDP and +9 month PCE; 21:15 ECB rate decision (current deposit rate 2.50%); Eli Lilly and Mastercard before the open; Amazon and Intel after the close.
  • 30 October (Fri): Bank of Japan decision around the morning (expected to hold at 1.25%); Exxon Mobil and Chevron before the open.
  • Later: Treasury quarterly refunding announcement on 4 November; US October nonfarm payrolls on 6 November; Apple's FY26 Q4 earnings after the close on 2 November.

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