Meta Platforms' stock plunged on Thursday after the company indicated it intends to spend "hundreds of billions" of dollars on artificial intelligence over the coming years. Shares fell more than 6 percent intraday and the move erased roughly $115 billion from Meta's market capitalization.
According to reporting by the Financial Times, investors reacted strongly to the prospect that the company may begin large-scale fundraising as early as this autumn to finance its AI-led strategy, and some market participants questioned whether debt-funded expansion of AI infrastructure is sustainable.
Spillover across US tech indices
Meta's decline weighed on broader US technology benchmarks: the tech-heavy Nasdaq 100 fell about 2.5 percent and the S&P 500 dropped around 1.4 percent as investors rotated toward defensive sectors such as consumer staples, financials and healthcare.
The sell-off was compounded by rising geopolitical tensions in the Middle East and fears of disruption to oil supplies. Brent crude climbed to $113.8 a barrel on Thursday, a five-month high.
Pressure on bond markets and eurozone spreads
The move away from risk also affected government bond markets in the eurozone. The yield on the ten-year French government bond rose to 5.06 percent after crossing the 5 percent threshold for the first time since 2002. The French–German yield spread widened to roughly 1.7 percentage points, the largest gap since the peak of the 2011 eurozone debt crisis.
Rohan Khanna, head of European rates research at Barclays, warned that French and Italian markets had entered a phase of intense selling as leveraged traders closed positions, and that the market did not expect near-term intervention by European authorities.
In the US, the ten-year Treasury yield fell by 0.11 percentage points to 5.04 percent as investors sought safe-haven assets.
Losses in Asia and global reach of the sell-off
Asian markets also suffered. China's CSI 300 index dropped 1.8 percent and has fallen about 20 percent since June, putting it into bear market territory. Tokyo's Nikkei 225 lost 2.7 percent, Seoul's Kospi fell 3.5 percent and Hong Kong's Hang Seng declined 3 percent.
Management comments and investor sentiment
At a closed-door investor meeting on Wednesday, Scott Bessent attempted to reassure attendees that he did not see a "systemic problem" arising from the AI-driven rally. Nevertheless, current market moves reflect investor unease about funding large-scale AI investments, heightened geopolitical risk and rising energy prices.
The article was prepared with assistance from an AI tool; a journalist edited and verified the final text. This content does not constitute investment advice.
