U.S. technology megacaps slid on Monday, with SpaceX shares extending their recent slump and mounting concerns over rising artificial intelligence expenses weighing on the sector. The Nasdaq Composite fell 1.2% in afternoon trading, led by losses in major tech names.
SpaceX Continues Downtrend
SpaceX shares dropped 4.5%, extending a decline that has erased more than $30 billion in market value over the past two weeks. The company's valuation has come under pressure amid reports of production delays for its Starship rocket and increased competition in the satellite launch market.
According to analysts at Morgan Stanley, the sell-off reflects growing skepticism about SpaceX's near-term revenue prospects, particularly from its Starlink satellite internet business, which faces rising competition from Amazon's Project Kuiper.
AI Expense Worries Hit Sector
Broader concerns about the cost of artificial intelligence investments also weighed on the sector. Nvidia fell 2.8%, while Microsoft and Alphabet each declined more than 1.5%. Investors are increasingly focused on the massive capital expenditures required to build and maintain AI infrastructure, with some questioning whether returns will materialize as quickly as hoped.
"The market is starting to price in the reality that AI buildout is incredibly expensive, and the payoff may take longer than initially expected," said Mark Haefele, chief investment officer at UBS Global Wealth Management. "This is leading to a rotation out of the high-flying tech names."
Broader Market Impact
The sell-off in tech dragged the broader market lower, with the S&P 500 falling 0.8%. The Dow Jones Industrial Average was relatively resilient, down just 0.2%, as investors rotated into value stocks and defensive sectors. Energy and healthcare stocks posted modest gains.
Treasury yields edged higher, with the 10-year note yielding 4.35%, as investors adjusted expectations for interest rate cuts. The Federal Reserve has signaled it will hold rates steady until inflation shows more sustained progress toward its 2% target.
Investors will watch for economic data later this week, including durable goods orders and personal consumption expenditures inflation readings, for further clues on the Fed's policy path.
