The Nasdaq Composite plunged more than 2% in trading on Friday, marking its steepest single-day decline since June as renewed worries over artificial intelligence spending and surging oil prices rattled investors. The sell-off hit major technology stocks and deepened concerns about the sustainability of heavy investments in AI and chipmaking.
According to CNBC and other financial sources, the Nasdaq fell 2.1% on the day, bringing its weekly loss to approximately 4.5%. The S&P 500 also retreated, slipping 1.1%, while the Dow Jones Industrial Average fell 0.3%. The losses were most pronounced in the technology sector, with companies such as Meta, Advanced Micro Devices, and Micron Technology suffering significant declines.
Semiconductor stocks led the downturn, with Micron and Intel among the hardest hit. The sharp drop in chipmakers followed mounting concerns about the returns on large-scale technology and AI investments, particularly as competition intensifies within the sector. Investors also cited worries about mounting ‘AI debt’—the costs and risks associated with aggressive spending on artificial intelligence infrastructure.
Oil prices climbed during the session, adding to the negative sentiment on Wall Street. The rise was attributed to escalating geopolitical tensions, especially reports of potential strike plans involving Iran. Higher energy costs have reignited fears about persistent inflation, prompting investors to reassess risk in growth-oriented sectors like technology.
As risk appetite faded, there was a notable rotation into defensive sectors such as consumer staples and healthcare, which outperformed the broader market. This shift reflected a growing preference for stability amid economic uncertainty and volatile commodity prices.
Tesla shares also came under pressure after the company lowered its capital expenditure forecast, raising fresh questions about its pace of expansion in AI and robotics. The move added to broader concerns about the outlook for tech spending and the ability of major firms to deliver returns on ambitious projects.
Despite the sell-off in the U.S., Asian technology stocks showed signs of recovery on Friday, with Japanese firms like SoftBank Group and Tokyo Electron rebounding after previous losses. However, the overall mood in global markets remains cautious, with investors closely watching developments in both the technology sector and energy markets.
Market participants are now awaiting further signals from the U.S. Federal Reserve regarding potential interest rate moves, as policymakers weigh the impact of inflation and market volatility. The outlook for technology stocks and broader equity markets remains uncertain as concerns over AI spending and oil prices persist.
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