A global stock market rebound lost momentum on Monday as renewed selling pressure hit major technology stocks in the United States, highlighting growing investor concerns about the sustainability of the artificial intelligence (AI) investment boom. US indexes initially climbed by 1% or more before reversing course during afternoon trading, as disappointing market reactions to major corporate financing and acquisition announcements weighed on sentiment.
Oracle shares fell 8.6% after the software company, a major player in the AI industry, announced plans to raise $20 billion through stock and bond sales. Marvell Technology dropped 13% after revealing a $115 billion agreement to acquire Lumentum, whose shares subsequently declined 18%. Intel also fell 8%, extending its 29% decline from Friday.
The latest reversal follows the Nasdaq’s largest decline in four months on Friday, reinforcing concerns about increasingly volatile investor sentiment toward AI-related stocks. Additional attention came from an updated regulatory filing by AI company Anthropic, which disclosed a 47% sequential increase in revenue during its latest quarter.
Growing Investor Concerns Over AI Investments
Market volatility reflects increasing scrutiny of the substantial capital investments required to develop AI infrastructure. While demand for computing capacity continues to expand, investors are becoming more selective about which companies can translate that demand into sustainable revenue and profitability.
According to Goldman Sachs analysts, capital expenditure by major cloud computing companies, known as hyperscalers, is expected to nearly double to $800 billion this year before increasing further to $1.2 trillion in 2027.
However, the investment bank expects S&P 500 earnings per share growth to slow to 18% next year, compared with nearly 30% in 2026. This difference between accelerating infrastructure spending and moderating earnings growth is raising questions about the long-term returns of the AI investment cycle.
Investors are increasingly evaluating whether companies are already generating meaningful cash flows from AI demand, whether they are still financing infrastructure expansion, and whether their current stock valuations adequately reflect future growth expectations.
Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, noted that performance expectations are increasing and that greater volatility in AI-related investments could become more common during this stage of the market cycle.
Investors Face a Critical Week for Global Markets
Markets are entering an important week, with several major economic and corporate developments expected to influence investor sentiment. These include the latest monetary policy decisions from the Federal Reserve and European Central Bank, ongoing corporate earnings announcements and the US midterm elections scheduled for Tuesday.
Apple is among the major companies attracting attention, with its quarterly earnings report scheduled for release after Monday’s market close. Investors will be looking for indications of consumer demand, future revenue growth and the company’s plans for artificial intelligence.
In Europe, the STOXX 600 closed 0.4% higher, while MSCI’s global stock index traded slightly lower at 1,115 after reaching an earlier high of 1,125.
European markets received some support despite weaker manufacturing data. The S&P Global Eurozone Manufacturing Purchasing Managers’ Index (PMI) declined to 52.7 in October from 52.9 in September. Although the reading represented a slight slowdown, it remained above the 50-point threshold that indicates expansion.
Manufacturers continued to face pressure from slower new order growth, higher energy prices and supply chain disruptions, which have been squeezing profit margins across the region.
Meanwhile, US manufacturing activity improved in October. The Institute for Supply Management’s Manufacturing PMI increased to 55.5 from 54.5 in September, exceeding economists’ expectations and indicating stronger domestic manufacturing activity.
Oil Prices Decline Amid Developments in Iran Negotiations
Oil prices experienced a significant decline on Monday, with Brent crude futures falling approximately 7% to around $105 per barrel.
The decline followed reports that Iranian negotiators had left discussions with Qatari mediators, while a draft proposal was being circulated and another meeting remained possible. The developments came after US President Donald Trump recently threatened additional attacks against Iran.
Changes in geopolitical tensions and expectations surrounding energy supplies continue to influence commodity markets, particularly as investors assess the potential economic consequences of disruptions in the Middle East.
Apple Earnings in Focus as AI and Costs Raise Questions
Apple’s upcoming earnings report is expected to attract significant attention, with investors concentrating on three major areas: the company’s holiday-quarter revenue outlook, management’s comments on artificial intelligence and the redesigned Siri assistant, and rising memory chip costs.
Analysts expect higher memory component expenses to weigh on Apple’s profitability, potentially resulting in its weakest quarterly profit growth in six quarters. The company’s guidance and commentary on future AI investments could therefore play an important role in shaping investor expectations for the technology sector.
Central Bank Decisions and Economic Data Ahead
Currency markets remained relatively subdued on Monday. The euro increased 0.46% to $1.1199, while the US dollar gained 0.16% against the Japanese yen, reaching 157.90.
Several central banks are also scheduled to announce monetary policy decisions this week. Markets are anticipating potential interest rate increases from the Reserve Bank of Australia, the Bank of England and Sweden’s Riksbank, while Norway’s central bank is widely expected to maintain its current policy stance.
Investors will also be monitoring the US nonfarm payrolls report scheduled for Friday, which could provide further insight into employment conditions and influence expectations for future Federal Reserve interest rate decisions.
Overall, the combination of technology sector volatility, significant AI infrastructure spending, geopolitical uncertainty and central bank decisions is creating a challenging environment for global investors. The coming days could provide important indications of whether the recent AI-driven market rally can regain momentum or whether concerns about valuations and investment returns will continue to weigh on technology stocks.
