Nasdaq falls 750 points amid concerns over AI investment debt

The Nasdaq Composite Index dropped 751 points, or 2.8%, as investors grew concerned about the large debt AI companies are taking on to finance spending on data centers and chips, CBS News reported.

The broader S&P 500 and Dow Jones Industrial Average also declined, falling 1.4% and 0.1%, respectively, amid worries about whether massive AI investments will yield expected profits and the impact of high oil prices.

Wall Street analysts noted that AI growth depends heavily on capital expenditures, which are outpacing operating cash flow, making companies reliant on equity and debt investors who are becoming less willing to finance such spending.

The Brookings Institution estimates that AI infrastructure development will require over $10 trillion between 2025 and 2032, an investment scale larger than historic projects like 19th-century railroads and the dot-com boom, according to CBS News.

Despite some AI leaders remaining profitable, investors are reassessing the high costs amid mixed earnings reports, with companies like Meta Platforms and Tesla seeing stock declines after recent results.