Selloff in semiconductor stocks extended on Friday weighing on major US indexes as concerns mounted over the outlook for the artificial-intelligence trade, Bloomberg reported.
Weakness in technology shares weighed on the S&P 500 even as most of its components advanced. The Nasdaq 100 dropped 1.8%, while an index of major chipmakers declined for an eighth consecutive session—its longest losing streak since 2008.
CoreWeave sank 9.5%, extending a rout driven by concerns that investment in AI infrastructure had outpaced companies’ ability to generate sufficient returns.
Fawad Razaqzada of Stonex Trading and Forex.com told Bloomberg that the market debate had shifted from the potential size of the AI opportunity to whether the enormous investment required to realise it would ultimately prove profitable.
Although demand for chips and computing capacity remained strong, investors sought clearer evidence that spending on data centres, power generation, networking and other infrastructure would produce adequate returns. Signs that these concerns had begun spreading into credit markets added to the pressure, the report said.
Higher interest rates further complicated the outlook by reducing the present value of future earnings and increasing the cost of financing the infrastructure needed for the next phase of AI expansion.
The uncertainty renewed demand for safe-haven US Treasuries , helping bonds pare earlier losses. Meanwhile, Federal Reserve Chairman Kevin Warsh did little to challenge expectations that the central bank would keep interest rates unchanged that month.
During a discussion at the International Monetary Fund’s annual meetings in Bangkok, Warsh avoided commenting on the monetary-policy outlook or the US economy beyond reaffirming the Fed ’s commitment to price stability. He also said he would not prejudge the central bank’s remaining policy meetings of the year.
Brian Jacobsen of Annex Wealth Management told Bloomberg News that the week’s most notable development was the market’s reaction rather than the inflation data or comments from the Fed. As several AI-related stocks declined, investors shifted money into healthcare, financial, materials and smaller-company shares, which performed comparatively well.