A sharp US technology market decline, triggered by concerns over heavy AI spending, is forcing Indian investors at GIFT City to re-examine their international portfolios. With major tech firms like Alphabet and Intel facing scrutiny, the concentration risk in global feeder funds has become a primary concern for local investors.
The recent volatility in US equity markets has reached Indian investors participating through GIFT City platforms. On October 30, 2026, the Nasdaq Composite tumbled by 2.86 percent, marking its largest single-day percentage decline since June. This sharp correction has triggered a reassessment of international asset allocations for those who had bet heavily on global technology funds.
The selloff was primarily driven by investor skepticism regarding the massive capital commitments made by major tech firms. Hyperscalers including Alphabet, Amazon, Meta, and Microsoft are projected to spend over $700 billion collectively in 2026, largely focused on building artificial intelligence infrastructure. However, the market is increasingly questioning whether these massive outlays will translate into sustainable profit growth in the near term. For instance, Alphabet reported a negative free cash flow of $9.1 billion for the third quarter, a stark reversal that added to market anxiety. The sentiment was further pressured by Intel, which saw its share price plunge nearly 29 percent on the same day—its worst daily performance since 1974—following weak earnings guidance.
For Indian investors using GIFT City, the primary concern lies in the structure of their international investments. Many have funneled capital into Nasdaq 100 or S&P 500 feeder funds, which are inherently concentrated in the same large-cap technology stocks currently under pressure. As these tech giants have dominated recent market gains, their correction has led to a direct and swift decline in the net asset values of these international funds. This highlights a significant concentration risk, where diversification across multiple funds does not necessarily equate to portfolio stability if all funds hold the same top-tier technology names.
Beyond market volatility, investors in GIFT City also face structural risks that are often overlooked. One such factor is the US estate duty, which can be as high as 40 percent on direct holdings of US stocks or mutual funds for Indian tax residents. Additionally, the broader macroeconomic environment, characterized by elevated crude oil prices and high borrowing costs, continues to compress corporate margins across the sector.
As the market adjusts to these concerns, the focus for investors is shifting from pure growth chasing to fundamental quality. The key monitorable for the coming months will be the ability of these technology companies to provide clear evidence of sustainable AI profit margins and efficient capital allocation. Investors may track future quarterly earnings reports to see if these major players can stabilize their free cash flow and demonstrate that the high capital spending is yielding the expected returns.