Key Highlights

● Meta fell Friday amid a technology selloff and concern over debt-funded AI spending.

● Investors shifted from what AI can do to how its build-out is financed.

● All but seven of the 75 S&P 500 technology stocks closed lower.

● Meta reports third-quarter results Oct 21, a week before the Fed's Oct 28 decision.

A drop ahead of earnings

Meta Platforms (NASDAQ:META) fell on Friday, trading near $709.33, according to market data. The decline came as part of a broad technology selloff and amid concern over debt-funded AI spending, according to market reports. Credit pressure tied to data-center financing was also cited as a weight on the stock.

The timing matters. Meta reports third-quarter earnings on October 21, and investors are watching closely for updates on how much the company plans to spend on AI infrastructure and how it intends to pay for it.

The AI financing shift

According to market commentary, investors on Friday moved from asking what artificial intelligence can do to asking how it will be financed. Companies borrowing heavily to build data centers were hit hardest, and the concern spread to the largest platforms that are pouring money into AI computing capacity.

Market reports said the week's rotation erased more than $1 trillion from semiconductor and AI-related stocks. One market commentator said, "The AI group is now splitting between companies that can fund the buildout themselves and those that have to borrow."

A senior market analyst said that "upcoming Big Tech earnings will still need to demonstrate that the enormous investment in AI is translating," a test that Meta faces next week.

Big Tech in retreat

Meta was not alone. Alphabet (NASDAQ:GOOGL) fell, with concerns cited about the cash-flow effect of borrowing for data centers. Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) slipped, according to market reports. All but seven of the 75 technology stocks in the S&P 500 closed lower, and Communication Services, the sector that includes Meta and Alphabet, was among the weakest, per market data.

The Nasdaq-100 fell sharply, though reports differed on the size of the move, and one report described a steep weekly loss for the index. The Nasdaq Composite tumbled 572.99 points to 26,140.03, capping its worst week since June. The S&P 500 fell 84.62 points to 7,659.44 and the Dow Jones Industrial Average slipped 175.28 points to 52,002.41.

What Meta does

Meta owns Facebook, Instagram, WhatsApp and Messenger, and earns most of its revenue from advertising across those apps. It has been investing heavily in AI models and the data centers needed to run them, as well as in its Reality Labs hardware division. That spending has made it one of the companies at the center of the debate over AI returns.

Rates and the Fed

The 10-year Treasury yield eased over the week to finish near 5.1, according to market data, after topping 5.3 earlier in October, its highest since 2002, per market reports. Higher yields raise the cost of borrowing for large projects. Fed Chair Kevin Warsh, speaking in Bangkok, said, "I don't prejudge meetings." The next Fed decision is due October 28.

Meta Capex Plans Take Center Stage

Meta reports after the close on October 21. Consensus estimates vary by source: one puts expected earnings at $6.31 a share, another shows $6.35, and a third lists $6.77 on revenue of about $63.29 billion. Investors will focus on capital spending plans, any comments on financing, and advertising trends. Tesla (NASDAQ:TSLA), Lam Research (NASDAQ:LRCX) and Texas Instruments (NASDAQ:TXN) report the same day.