Ballooning fears over artificial intelligence spending sent the Nasdaq Composite to its worst week since June, with the tech-heavy index falling 2.2 per cent and snapping a four-week winning streak, as chip stocks endured their longest losing streak in eight years.
The S&P 500 dropped 1.1 per cent and the Dow Jones Industrial Average fell 176 points, or 0.3 per cent, on Friday as the selloff spread from chipmakers to software stocks and popular Big Tech positions.
Chip rout deepens
CoreWeave sank again amid broader investor concern about AI spending, finishing down 12 per cent on Friday. The iShares Semiconductor ETF fell for a ninth straight day — its longest losing streak in two decades — while the Philadelphia semiconductor index sank 3.8 per cent for an eighth consecutive down day, its longest negative streak since October 2018, leaving it down 15.7 per cent since October 6.
Among the biggest decliners were Coherent, down 7.1 per cent to $232.90; Arm Holdings, down 6.9 per cent to $227.80; and Tower Semiconductor, down 6.8 per cent to $195.58, according to Investor's Business Daily. Memory-chip names including Western Digital, Sandisk, Micron and Seagate dragged the Roundhill Memory ETF down 5.5 per cent.
What rattled investors
Investors are openly questioning the funding of the AI buildout, with higher rates and growing scrutiny of Anthropic's and OpenAI's business models — and stress at heavily leveraged neocloud companies like CoreWeave — reviving dot-com comparisons.
"The market is burnt out on AI," DataTrek Research co-founder Nicholas Colas said, adding that equity investors are not used to being venture investors. The CBOE Volatility Index surged north of 20, a level viewed as signalling heightened volatility.
Treasuries rallied as investors sought safety: the 2-year yield ended the week at 4.734 per cent, the 10-year at 5.097 per cent and the 30-year at 5.436 per cent after its biggest one-week decline. With Magnificent Seven earnings — beginning with Tesla and Meta — under heightened scrutiny next week, the AI trade faces its sternest test yet.
Sources: Barron's, Investor's Business Daily
The S&P 500 dropped 1.1 per cent and the Dow Jones Industrial Average fell 176 points, or 0.3 per cent, on Friday as the selloff spread from chipmakers to software stocks and popular Big Tech positions.
Chip rout deepens
CoreWeave sank again amid broader investor concern about AI spending, finishing down 12 per cent on Friday. The iShares Semiconductor ETF fell for a ninth straight day — its longest losing streak in two decades — while the Philadelphia semiconductor index sank 3.8 per cent for an eighth consecutive down day, its longest negative streak since October 2018, leaving it down 15.7 per cent since October 6.
Among the biggest decliners were Coherent, down 7.1 per cent to $232.90; Arm Holdings, down 6.9 per cent to $227.80; and Tower Semiconductor, down 6.8 per cent to $195.58, according to Investor's Business Daily. Memory-chip names including Western Digital, Sandisk, Micron and Seagate dragged the Roundhill Memory ETF down 5.5 per cent.
What rattled investors
Investors are openly questioning the funding of the AI buildout, with higher rates and growing scrutiny of Anthropic's and OpenAI's business models — and stress at heavily leveraged neocloud companies like CoreWeave — reviving dot-com comparisons.
"The market is burnt out on AI," DataTrek Research co-founder Nicholas Colas said, adding that equity investors are not used to being venture investors. The CBOE Volatility Index surged north of 20, a level viewed as signalling heightened volatility.
Treasuries rallied as investors sought safety: the 2-year yield ended the week at 4.734 per cent, the 10-year at 5.097 per cent and the 30-year at 5.436 per cent after its biggest one-week decline. With Magnificent Seven earnings — beginning with Tesla and Meta — under heightened scrutiny next week, the AI trade faces its sternest test yet.
Sources: Barron's, Investor's Business Daily
