Tech stocks fall as Nvidia boss warns of AI funding slowdown

US equities retreated on Thursday after Jensen Huang, chief executive of Nvidia, cautioned that a scarcity of capital is impeding the expansion of artificial intelligence infrastructure. The comments contributed to a broad sell-off in technology shares, with the Nasdaq 100 index sliding and the S&P 500 falling in New York trading. Huang stated in an interview with CNBC that while demand for "neoclouds" such as Coreweave and Nscale is extremely high, the working capital required to fuel that growth is insufficient. He noted that the demand for capital currently exceeds its availability, though he added that this imbalance will be resolved. The remarks heightened investor concerns regarding the financial sustainability of the current AI investment cycle.

Market sentiment was further weighed down by spending disclosures from major technology peers. Meta shares dropped after the company announced it would raise the lower bound of its annual capital expenditure from $130 billion to $135 billion. To finance these additional AI outlays, the group led by Mark Zuckerberg issued new non-voting stock. In a separate development, Tesla shares slid after Elon Musk's company reduced its proposed AI spending from $25 billion to $20 billion. These moves came amid existing shareholder skepticism about the immediate financial returns on heavy AI investments.

Energy prices also contributed to the market decline, as geopolitical tensions in the Middle East drove crude oil higher. Brent crude rose to $111.60 per barrel, marking the first time the benchmark has traded above $110 since May. The price surge followed reports that Saudi Arabia's state oil company, Aramco, forced staff to evacuate its headquarters in Dhahran due to threats from Houthi forces. More than 30,000 employees work at the compound located on Saudi Arabia's Gulf coastline near Bahrain. Aramco instructed staff to leave its largest office complex and work from home after a warning alarm sounded, an event described as a sign of strain on the world's largest oil exporter.

The Houthis have intensified attacks on Saudi energy and transport infrastructure in recent weeks, a development that has renewed fears over global energy supplies. A strike on Aramco's Shaybah oil field occurred on Wednesday, although Saudi Arabia's energy ministry stated that the attack did not affect production levels. The combination of AI funding concerns and rising energy costs created a challenging environment for investors, with the tech sector bearing the brunt of the selling pressure as traders reassessed risk exposures.