Stock markets that trade shares of many of the world's technology leaders suffered their biggest weekly decline in seven months on Friday as investors fear an "AI bubble" and question the industry's profitability.
Stock markets that trade shares of many of the world's technology leaders suffered their biggest weekly decline in seven months on Friday as investors fear an "AI bubble" and question the industry's profitability.
Futures on the S&P 500 and Nasdaq 100 rose 0.3% in Asian trading on Friday afternoon. However, this small increase was preceded by a significant 1.9% drop in the Nasdaq Composite Index on Thursday.
The tech index fell 2.8% for the week. If it holds, it would be the biggest weekly decline since April, when Trump's tariffs were announced, Reuters reports .
European futures, including FTSE futures, fell 0.3%. In Asia, the situation is more complicated: Japan's Nikkei fell 1.2%, leading to the biggest weekly decline (4.1%) since April. South Korea's KOSPI lost 1.8% on the day and 3.7% on the week, its biggest drop since February.
Chip and cable makers were among the biggest losers, with shares of technology investor SoftBank Group down nearly 20% this week. Bitcoin, sometimes seen as a gauge of sentiment in the tech sector, fell 8% for the week to $101,090.
While there was no clear reason for the decline in AI stock prices, the market reaction to recent reports suggests that fears of a “bubble” in the sector and doubts about profitability are starting to intensify.
Meta shares plunged late last month after the company announced a large capital expenditure to build data centers as part of its AI expansion. Shares of Palantir Technologies, a data and artificial intelligence company, also fell sharply despite beating earnings estimates.
