AI-capex doubts just triggered one of the sharpest tech selloffs of the year, and researchers are warning the risks don't end there.
The published research consensus ties the 22 October rout — Nasdaq 100 down ~2.9%, semis down 6-7% — to growing doubts over AI returns and financing. Meta's $135-145B capex plan and negative free cash flow were the flashpoint. Analysts describe an unwind of the crowded long-AI trade, with some flagging credit stress at hyperscalers. The flight to safety pushed the 10-year Treasury yield back below 5%.
On oil, a contrarian thread of recent research argues Brent above $110 reflects a roughly $27/bbl geopolitical risk premium — tied to Houthi strikes on Saudi infrastructure and fears of US-Israeli action on Iran after the US midterms. Most researchers see the inflation hit as energy-led, with limited core pass-through so far.
France is the other pressure point: the French-German bond spread is near 175bp, the widest since 2011, and most analysts see ECB intervention as unlikely near term.
Watch the Fed on 28 October and Big Tech earnings next week.