Meta's AI Spending Spree Triggers Broad Tech Selloff

A broad selloff hit AI-related stocks on Thursday after Meta announced plans to issue new shares to fund its massive AI infrastructure spending, with Meta falling 8%, its largest drop since July, and Nvidia declining 4%. The selloff reflects investor concerns about the rising costs and uncertain returns of AI investment, as Meta reported negative free cash flow of $2.12 billion in the third quarter, its first cash burn in over a decade, and raised its annual spending forecast to at least $135 billion. Credit default swaps tracking perceived default risk among major AI players have risen, with Meta's hitting a record. The market turmoil also spread to Treasury prices, as investors repriced the risk of a US growth scare, and hit smaller "neocloud" companies like CoreWeave, whose unsecured bond yields soared to 15%, highlighting worries that financing costs may become prohibitive for smaller AI firms.