AI Rout Tests Wall Street

The sell-off in technology and AI stocks is testing Wall Street’s ability to hold on to its gains, as investors worry about the cost of massive spending on data centers and infrastructure—and whether future returns will be sufficient to justify it. In October, the technology sector fell 6.8%, while nine of the 11 sectors posted gains and more than 70% of S&P 500 companies saw their shares rise. But the sector dropped 4.2% on Friday, and Intel shares fell nearly 29%, dragging the index down 1.8%. Oxford Economics estimates that AI has recently accounted for about one-third of U.S. economic growth. Meanwhile, the S&P 500’s close below its 100-day moving average has heightened investors’ concerns that the sell-off could broaden if technology stocks keep falling or spending on them contracts.

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