new York
Tech stocks had a tumultuous week as concerns including rising interest rates and growing AI debt continued to weigh on investor confidence.
The Nasdaq Composite fell 2.14% on Friday, bringing its weekly losses to around 4.5% – its worst week since June. The S&P 500 fell 1.09%, bringing its weekly losses to nearly 2%, also its worst week since June.
The Nasdaq and S&P hit record highs just 10 days ago. But since then, the market has stumbled as nervousness spread over whether rising borrowing costs would put pressure on the AI boom’s risky sectors that rely on debt.
At the center of concerns is a niche group called neoclouds, which rents computing power to burgeoning AI companies. CoreWeave (CRWV), a neocloud IPO in 2025 and backed by Nvidia, has become a particular source of anxiety in the market.
CoreWeave has tens of billions of dollars of debt on its balance sheet as it borrows money to finance its growth. Recently, bond yields have risen to levels that signal distress or higher default risk.
“It’s not clear that (CoreWeave) is going to get a good enough return to pay off the debt that they’ve borrowed,” Gil Luria, head of technology research at DA Davidson, told CNN. “As people worry about the trajectory of construction, they are the subprime portion of the AI trade, and that’s why they sell first.”
Luria said he believes the demand for AI is real and growing, but for companies like CoreWeave, it faces concerns about unsustainable funding and high interest rates.
Nvidia CEO Jensen Huang stepped in Thursday to allay concerns, telling Bloomberg he was optimistic about CoreWeave, an endorsement that contributed to the company’s stock rise Thursday. But it was short-lived: the stock fell nearly 12% on Friday.
CoreWeave shares lost a quarter of their value this week. The stock is down more than 65% since a peak shortly after its March 2025 IPO.
Meanwhile, oil prices jumped Friday and Brent crude touched $110 a barrel for the first time since May, exacerbating concerns about inflationary pressures that could push the Federal Reserve to further raise interest rates.
Adding to the market anxiety this week: a sharp decline in the number of semiconductor chipmakers, the so-called “picks and shovels” of the AI boom.
A closely watched index of semiconductor chip stocks fell 3.8% on Friday, falling for the eighth straight day. The index fell 11.4% over the week, its worst weekly performance since April 2025.
Investors have driven up chip stocks this year on expectations of massive AI development and a chip shortage that would allow companies to reap huge profits. But those stocks are losing luster as Wall Street frets over concerns about rising costs and the politicization of data centers that could hamper development forecasts.
Meanwhile, semiconductor stocks have not recovered since Chinese memory chip maker CXMT announced earlier this week that it had made progress in advanced memory chips. The development worries investors who were betting that U.S. and South Korean chipmakers would have dominant market share and pricing power, and are now wondering whether cheaper and efficient Chinese chips could spoil that outlook.
“The market sells first, asks questions later,” said Thomas Martin, senior portfolio manager at Globalt Investments. “That’s why you get the volatility.”
The semi-finished goods index is down more than 20% since its peak in June, although it is still up more than 50% since the start of the year.
The South Korean stock market has had a tumultuous week. The benchmark Kospi index is heavily weighted in just two companies: chipmaking titans SK Hynix and Samsung Electronics.
The Kospi fell 14.5% this week, its worst weekly performance since 2008. The Kospi had soared this year, and as of June it was up 116% year to date. But the Kospi has erased all its gains over the past six months and is now up 35% year to date.
Semiconductor chips, key to AI, have become an increasingly important part of the stock market. The semiconductor industry accounts for about a fifth of the S&P 500’s market value. Further losses could spell trouble for the entire market.
Wall Street’s fear gauge, the VIX, jumped more than 20% on Friday and topped 20 points – a level that signals high volatility in the markets. All told, the S&P 500 and Nasdaq are down about 2% and 5%, respectively, since their peaks earlier this month.
Gn headline
