Financial markets fell on Friday as investors in technology stocks worried that companies exposed to artificial intelligence are starting to falter.
The tech-heavy Nasdaq Composite fell 573 points, or 2.1%, to end at 26,140, ending its worst week since June. The broader S&P 500 and blue-chip Dow Industrial Average fell 1.1% and 0.3%, respectively.
Chipmakers and other tech companies are under pressure this week as investors worry about the heavy borrowing associated with the emergence of AI and the rapid expansion of thousands of data centers needed to provide computing power for AI models.
So-called neocloud companies such as CoreWeave, which provide the raw computing power to make AI models work, were particularly hard hit. That’s because they finance much of their capital spending through debt and equity issuances rather than cash flow, raising investor concerns about mounting debt, market analyst Adam Crisafulli, head of Vital Knowledge, told CBS News.
Shares of CoreWeave fell nearly 12% on Friday and are down about 24% this week as investors nervously eye its mounting debt. Micron Technology fell 5.6%, Advanced Micro Devices fell 6%, Broadcom fell 4.5% and Intel lost 5.8%.
Elsewhere on Wall Street, Tesla shares fell 2.1% after the electric vehicle company unveiled a new Roadster sports car that seems capable of pushing itself into the air.
The drop on Friday came amid concerns about whether soon-to-be-public AI firm Anthropic will be able to sustain its earnings momentum, Crisafulli said in a note to investors. Anthropic investors now consider valuing the company at $1.5 trillion, down from the original target of $2 trillion, Reuters reported on Thursday.
Inflation is moving in the wrong direction
Even rattling investors this week were fresh signs that US inflation is rising and further away from the Federal Reserve’s 2% annual target.
Yields on 10-year US Treasury bonds – a key benchmark for mortgages, credit cards and other loans – held steady at 5.1% on Friday. Earlier this month, Bond yields have risen to their highest level in more than two decades amid concerns about inflation and rising US government debt.
The warm inflation readings this week could prompt the Federal Reserve to raise interest rates at its next meeting on October 28-29, according to some economists. For now, most Wall Street traders expect the central bank’s short-term rate to remain unchanged, but the odds of a rate hike at the Fed’s December meeting have jumped to 74.3% from 50.2% a month ago, according to CME FedWatch, which tracks Fed fund futures prices.
On Friday, Fed President Kevin Warsh offered no hints about potential interest rate policy moves while attending a meeting of financial leaders in Bangkok. The Fed increased rates at its last meeting in September, will bring the federal funds rate to between 3.75% and 4% – its highest level since December 2025.