Tech stocks fall as AI-related debt concerns weigh on Wall Street
Investors pulled back from semiconductor and AI-focused companies amid worries over rising debt and higher inflation, sending the Nasdaq down more than 2% on Friday.
U.S. equity markets declined on Friday as technology shares retreated over worries that firms tied to artificial intelligence are accumulating significant debt. The Nasdaq Composite dropped 573 points, or 2.1%, closing at 26,140, marking its steepest weekly loss since June. The S&P 500 and Dow Jones Industrial Average fell 1.1% and 0.3%, respectively.
Analysts highlighted the financing needs of AI-related data-center operators, noting that many are raising capital through debt and equity rather than cash flow. Adam Crisafulli, head of Vital Knowledge, said the debt load of “neocloud” providers such as CoreWeave is prompting investor caution. CoreWeave’s stock slipped nearly 12% on Friday and has fallen about 24% over the week. Other chipmakers also posted losses, with Micron Technology down 5.6%, Advanced Micro Devices 6%, Broadcom 4.5% and Intel 5.8%.
Tesla shares declined 2.1% after the company unveiled a new Roadster model. Concerns were also voiced about the upcoming IPO of AI firm Anthropic, whose valuation expectations have been revised downward from $2 trillion to $1.5 trillion, according to Reuters.
Inflation data added to market pressure, as recent readings suggest price growth is moving away from the Federal Reserve’s 2% target. The yield on 10-year U.S. Treasury bonds held at 5.1% on Friday, while expectations of a rate hike at the Fed’s October meeting remain low. However, the probability of a December rate increase rose to 74.3% from 50.2% a month earlier, according to CME FedWatch.