On October 23, the three major U.S. stock indices all fell in the morning session. The pressure of infrastructure financing and the continuous rise in international oil prices AI put downward pressure on market risk appetite. As of 10:16 a.m. Eastern Time, the Dow Jones Industrial Average fell by 683 points, or 1.3%; the S&P 500 Index fell by 45 points, or 0.6%; and the Nasdaq Composite Index fell by 58 points, or 0.2%. Previously, the Nasdaq Index tumbled 2.6% on Thursday, recording its largest single-day decline since June. Although some AI concept stocks showed signs of stabilization on Friday, Brent crude oil rose to $115 per barrel for the first time since May, exacerbating market concerns about energy inflation and the future of the Federal Reserve's monetary policy.

AI Financing pressure becomes a market focus; Jensen Huang warns of insufficient capital supply

The main reason for the recent sell-off in tech stocks is that investors have begun to question whether AI companies will be able to continuously obtain sufficient funds to support the expansion of their data centers and the construction of computing power infrastructure.

Meta Platforms announced this week the establishment of new Class C shares without voting rights, providing more options for future fundraising of AI investment funds, which has sparked concerns in the market about large-scale equity financing and the dilution of existing shareholders' equity. With some large technology companies experiencing negative free cash flows and potential increases in future borrowing costs, the market expects that more companies may need to raise funds by issuing stocks. Meta On Thursday, the stock price recorded its largest single-day decline since July, and continued to be under pressure in the early sessions on Friday.

NVIDIA CEO Jensen Huang also warned in a recent interview that the infrastructure construction of AI is facing a shortage of capital, and the scale of funds required by the industry far exceeds the currently available funds. Yardeni Research analysts pointed out that the market was previously mainly concerned about the continuous rise in financing costs for AI companies, as well as whether such substantial investments would bring sufficient returns; now, a new issue has emerged: whether the capital market has enough funds to support the AI expansion plans of all companies.

Analysts from Vital Knowledge believe that in the short term, investors' sentiment and positions towards the AI sector have clearly turned pessimistic, which may create conditions for a rebound in related stocks. However, the same institution also points out that the AI industry has entered a new phase where the capital market financing environment is no longer as lenient as before.

Brent crude oil touches $115, raising concerns about inflation due to supply risks in the Middle East

Rising energy prices have further increased pressure on the U.S. stock market. On October 23, Brent crude oil continued its upward trend, reaching $115 per barrel during trading, the first time it has reached this level since May of this year. The market is concerned about the escalation of geopolitical tensions in the Middle East, which could disrupt the regional energy supply that had just begun to show signs of recovery.

Previously, the transportation of crude oil in the Persian Gulf gradually resumed, which to some extent alleviated market concerns about supply shortages. However, with the risk of regional military conflicts rising again, traders have once more raised their vigilance regarding disruptions in energy supplies. The continuous rise in oil prices could be transmitted to overall prices through gasoline, diesel, and transportation costs, increasing inflationary pressures in the United States.

Despite a clear rebound in energy prices, the market still expects the Federal Reserve to keep interest rates unchanged at its meeting next week. The Fed raised interest rates for the first time since 2023 in September, and some officials have recently downplayed the necessity of raising rates again immediately, but still emphasize the need to bring inflation back down to the target level of 2%. The market expects the Fed to raise rates again at its last meeting of the year in December.

U.S. Treasury yields rebound slightly, pressure persists in the French bond market

Changes also occurred in the U.S. Treasury market on Friday. The previous day, affected by the significant decline in technology stocks related to AI, investors flocked to U.S. Treasuries as a safe-haven, driving the yield of 10-year U.S. Treasuries to record its largest single-day decline since March 2023. On Friday, as some technology stocks stabilized, the yield of 10-year U.S. Treasuries rebounded slightly.

Meanwhile, the French government bond market is still affected by domestic unrest and fiscal conditions. Recent social turmoil in France has continued, and investors are concerned that increased public spending may further exacerbate the government's fiscal pressures. After a significant rise in French government bond yields on Thursday, they fell on Friday, and the bond market has temporarily stabilized.

The different performances of the bond markets in the United States and France reflect that investors are simultaneously assessing the industry risks of AI, the rising global energy prices, as well as the fiscal credit conditions of some countries.

Western Digital's financial report exceeded expectations, yet its stock still fell; AI hardware sector faces repricing

In terms of individual stocks, Western Digital ( Western Digital ) fell by more than 1% in early trading on Friday, despite the company's previously announced first-quarter results for fiscal year 2027 and second-quarter guidance exceeding Wall Street's expectations. Driven by the rapid growth in demand for large-scale data storage from the AI system, Western Digital's stock price has risen by over 86% since the beginning of this year.

However, the company warned during its financial report conference call about rising investment costs and increased future capital expenditures, prompting investors to re-evaluate its profit margins and cash flow prospects. Western Data's stock price once rose after the release of its financial report, but then turned down, indicating that even as AI related companies continue to experience strong growth, the market's sensitivity to cost pressures and return on investment is also increasing.

Overall, the downward pressure on U.S. stocks on Friday came from two main aspects: firstly, the continuous expansion of AI infrastructure investment scale, which put technology companies under greater external financing demands; secondly, international oil prices rose to a five-month high, increasing uncertainty regarding inflation and interest rate prospects. Although the decline in some AI stocks has eased to some extent, the market's re-evaluation of the industry's financing capabilities and long-term profit returns is still ongoing.

Responsible Editor: Long Yunxiang