AI funding concerns reignite and Middle East tensions escalate! Nasdaq posts biggest single-day drop since June, international oil prices surge

According to Zhitong Finance APP, most U.S. stocks closed lower on Thursday as massive capital expenditures and financing pressures in the artificial intelligence (AI) sector renewed investor concerns, leading to a large-scale sell-off in technology stocks. At the same time, heightened geopolitical tensions in the Middle East fueled a sharp rise in international oil prices, prompting safe-haven funds to flow into U.S. Treasury bonds, which sent yields significantly lower.

By the close, the Nasdaq Composite Index fell 2.6% to 26,008.86 points, marking its largest single-day drop since June; the S&P 500 Index dropped 1.21% to 7,663.43 points, its worst single-day performance since July; while the Dow Jones Industrial Average edged up 11.89 points, or 0.02%, to close at 52,867.98 points.

Tech stocks were the main drag on the market that day. Meta (META.US) shares fell about 7%. Although the company's latest quarterly revenue exceeded market expectations and it issued optimistic guidance, its massive AI investment requirements still made investors uneasy. Other technology stocks also came under pressure. AMD (AMD.US) dropped more than 8%, Micron Technology (MU.US) fell 6%, and Nvidia (NVDA.US) lost 4%.

CoreWeave (CRWV.US), an AI cloud computing infrastructure provider, saw its share price tumble 10%. Previously, the company’s bond yields and credit default swap (CDS) prices remained high, highlighting investor concerns over its debt load and financing ability.

Notably, in an interview on Thursday, Nvidia CEO Jensen Huang stated that market demand for new cloud service providers is extremely strong, but a shortage of capital is restricting the pace of expansion for these companies.

Wells Fargo traders noted in a report that Huang’s comments on capital scarcity unsettled the market, renewing concerns about the credit market's risk tolerance and whether financing channels are becoming saturated. The firm also noted that Meta’s remarks about the large capital required for AI development further exacerbated concerns over capital expenditure in the tech sector, weighing not only on its own stock price but also putting pressure on the broader market.

JPMorgan traders pointed out that the previously optimistic market sentiment from Wednesday reversed overnight. Meta's stock weakened in pre-market trading, and increased discussions about the potential further escalation of the situation in Iran after the U.S. midterm elections jointly undermined investor confidence. The firm stated that, based on market price movements and feedback from its trading desk, the market narrative around AI financing remains highly fragile. Following recent corrections in technology stocks, investors have yet to regain enough confidence and lack the willingness to significantly increase their risk exposure for now.

Meanwhile, rising geopolitical risks in the Middle East pushed international crude oil prices sharply higher.

According to reports quoting sources, the United States and Israel plan to launch a new round of strikes against Iran after the U.S. midterm elections next month. U.S. President Trump told reporters on Wednesday evening that Washington is not currently negotiating with Tehran and said that certain events would happen "before long." The news heightened market concerns about further escalation of conflicts in the Middle East and potential disruptions to global oil supplies.

As of Thursday's close, the international benchmark Brent crude oil futures rose 4% to $113.17 per barrel; U.S. West Texas Intermediate (WTI) futures increased 2.39% to $99.47 per barrel.

Under the dual impact of the decline in technology stocks and rising geopolitical risks, investors accelerated their shift to safe-haven assets such as U.S. Treasuries, pushing up bond prices and driving yields sharply lower.

The yield on the U.S. 10-year Treasury fell more than 17 basis points to 4.972%, the lowest level in nearly a month; the yield on the 2-year Treasury, which is more sensitive to monetary policy expectations, also dropped more than 16 basis points to 4.659%.

Overall, Thursday’s market performance reflects a shift in investor focus regarding the AI investment boom. Although demand for AI computing power remains strong, financing capacity, capital costs, and corporate cash flows required to support large-scale infrastructure construction have become key factors impacting the valuation of technology stocks.

Meanwhile, rising uncertainty in Middle East geopolitics has further fueled market volatility. Against the backdrop of AI financing concerns and intertwined geopolitical risks, investor risk appetite has noticeably cooled, with U.S. technology stocks under significant selling pressure, while oil and U.S. Treasuries have become the main destinations for capital reallocation.