Tech stocks fall as Nvidia boss warns of AI funding slowdown

US stocks fell sharply after the boss of Nvidia warned of an AI funding crunch and spending plans from Meta and Tesla spooked investors.

The tech-heavy Nasdaq 100 index slid 1.5pc in New York on Thursday, while the S&P fell nearly 1pc, as fears grew over the cost of sustaining the AI boom.

Surging oil prices added to the sell-off, with Brent crude rising past $112 per barrel for the first time since May.

The tech rout followed comments from Jensen Huang, Nvidia’s chief executive, who warned that a “scarcity of capital” was hampering the rollout of AI.

“If you look at the fundamentals, the demand for the neoclouds is off the charts,” he told CNBC, referring to companies such as Coreweave and Nscale, which offer cloud-based storage to AI companies.

“What is missing in the middle is the working capital to fuel that growth … because there’s just so much demand across so many sectors of AI, there’s a scarcity of capital.

“The demand for capital is much greater than the availability of capital. That’s going to get solved.”

Meta shares also fell 5pc after the company said it would increase its bet on AI spending despite shareholder scepticism about the financial benefits.

The group, led by Mark Zuckerberg, raised the lower bound of its capital expenditure from $130bn (£97bn) to $135bn and issued new non-voting stock to fund further AI outlays. Tesla shares also slid 2pc after Elon Musk’s group cut its proposed AI spending from $25bn to $20bn.

Middle East fears

Fresh fears about the Middle East conflict deepened Wall Street’s gloom.

Saudi Arabia’s state oil company was forced to evacuate staff from its headquarters amid the threat of renewed attacks from Houthi forces.

Aramco told staff to leave its largest office complex and work from home on Thursday after a warning alarm sounded, the latest sign of strain at the world’s biggest oil-exporting firm.

More than 30,000 Aramco employees work at the Dhahran compound, on Saudi Arabia’s Gulf coastline near Bahrain.

Brent crude climbed 2.5pc on Thursday to $111.60 per barrel, the first time it has risen above $110 since May, as the energy crisis escalates.

The Houthis have ramped up an aggressive campaign of strikes on Saudi Arabia in recent weeks, targeting energy and transport infrastructure in a new phase of the war in the Middle East that has renewed fears over global energy supplies.

The strikes also hit Aramco’s Shaybah oil field on Wednesday. However, Saudi Arabia’s energy ministry said the attack had not affected production.

Aramco was contacted for comment.