Nasdaq 100 Drops 5.5% After Firmus IPO Flops, Testing $1 Trillion AI Spending Boom
Updated
Updated · The Guardian · Oct 20
Nasdaq 100 Drops 5.5% After Firmus IPO Flops, Testing $1 Trillion AI Spending Boom
2 articles · Updated · The Guardian · Oct 20
Summary
A 5.5% slide in the Nasdaq 100 last week jolted AI-linked stocks after Firmus, an Australian datacentre company, failed to complete a multibillion-dollar ASX listing that had implied lofty future earnings.
That sell-off is being read less as a rejection of AI itself than as a valuation reset, with investors questioning whether this year’s roughly $1 trillion in AI investment can generate returns high enough to justify current prices.
U.S. hyperscalers spent $425 billion on AI-related capital expenditure in 2025 and are on track for $800 billion this year, while their bonds have swelled to nearly 10% of the global investment-grade market from 0.5% at end-2024.
The concentration risk is large: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla now make up 35% of the S&P 500, even though the Nasdaq 100 remains nearly three times its early-2023 value after the pullback.
The next test is U.S. earnings season, as strategists warn that open-source AI, public backlash and circular datacentre financing could expose overbuilding—though Australia is seen as outside the epicentre of any bust.
With tech giants borrowing heavily, could their hidden web of circular AI financing trigger the next major global credit crisis?
If open-source models crush pricing power, how will hyperscalers justify their massive trillion-dollar infrastructure spending to increasingly skeptical investors?
As communities block new datacentres and energy grids strain, will physical power limits quietly suffocate the artificial intelligence revolution?