Global markets have been gripped by a "risk-off mentality," resulting in a volatile period for investors, detailed extensively by Bloomberg Technology. The Nasdaq registered its worst week since April, falling 4% amid escalating anxiety over the soaring valuations of AI companies and significant turbulence in the digital currency sector. Bloomberg Technology highlighted that despite seeming strength, macro pressures and persistent fears about an "AI bubble" are dragging down major indexes.
The technology sector, the primary engine of recent growth, faced immense pressure, even after key players released seemingly positive reports. NVIDIA, a major AI beneficiary, was down 8% over the five trading days following a "blowout earnings report". Investors, however, focused on potential risks, including accounts receivable and inventory build-up. Adding to the market's distress, Oracle was on track for its worst week since March 2018, falling 40% from its high. Bloomberg Technology pointed out that the credit default swaps of Oracle have skyrocketed from about 44 basis points in September to over 100, signaling mounting concern over its weaker balance sheets and capital expenditure (CapEx).
This anxiety around debt is a central theme, as the five biggest AI spenders—Microsoft, Alphabet, Amazon, Meta, and Oracle—have collectively raised more than $100 billion in debt this year. This increase in borrowing is raising concerns that these companies could become "over-levered," creating a potential "house of cards" if expected returns are not quickly realized. Bloomberg Technology commentary emphasized that investors are not "clearly sold that the growth can continue," turning the focus to valuation issues.
Simultaneously, the digital currency market is struggling, with Bitcoin on track for its worst month since 2022, shedding 25% of its value in November alone. The total market value for virtual coins has dropped below $3 trillion for the first time since April. While some institutional money is stepping away following a washout in October, the bulk of the selling is happening in the actual spot crypto markets, not through Exchange-Traded Funds (ETFs). Bloomberg Technology also noted that digital asset treasuries, which acted as a flywheel on the way up by issuing debt or stock to buy underlying currencies, are now selling underlying assets, further exacerbating the downturn. Long-term concerns, such as the potential for quantum computing to "hack the encryptions" that keep Bitcoin safe, are also adding to investor jitters.
Amid this financial uncertainty, tech giants are aggressively building out infrastructure, as detailed by Bloomberg Technology. Meta is venturing into power trading, adding a new business to its portfolio to secure the massive energy required for its data centers, a move driven by the need to "front load capacity" for the anticipated "super intelligence".
Meanwhile, OpenAI announced a major partnership with Foxconn to design and develop AI data center hardware in the United States. Foxconn is planning an initial capital expenditure of $1 billion to $5 billion to build R&D centers and factories, aiming to "assert more ownership over the supply chain" and potentially lower costs as AI models become commoditized. Foxconn identified the biggest challenge to scaling up in the U.S. as the "shortage of labor," rather than the cost of labor.
In the chip supply chain, the U.S. government approved the sale of advanced AI chips to Saudi Arabia, a move praised by Cerebra's CEO Andrew Feldman, who called it "good policy" to get U.S. technology into the hands of allies in a fast-growing AI hub. Bloomberg Technology concluded that macro factors, including Federal Reserve speculation about a potential December rate cut, are truly what is moving the market, advising investors to view current selloffs as an "opportunity" to acquire great companies at lower levels, as AI remains the undeniable long-term growth engine. The overall feeling is one of FUD: fear, uncertainty, and doubt.
