Markets · · 2 min read
Editor: Bohdan S.
Big Tech stocks head for worst week since ‘liberation day’ as AI fears grow
Worries about how debt-heavy AI builders will repay their loans hit tech shares again on Friday, while investors moved into Treasuries and pulled bond yields off their highs.
The short answer
Big Tech stocks were heading for their steepest weekly fall since 'liberation day', the Financial Times (FT) reported, as AI jitters pushed investors toward government bonds. The Nasdaq was on course to lose more than 4% for the week, Reuters reported, with CoreWeave and chipmakers leading the declines.
What happened
The Financial Times (FT) reported that Big Tech shares were set for their largest weekly decline since 'liberation day', with nervous investors buying government debt and interrupting a months-long slide in Treasuries. On Friday afternoon the Nasdaq was down 2.19% at 26,128 and the S&P 500 had lost 1.22% to 7,649.71, Reuters reported. CoreWeave fell 12%, leaving it about 25% lower over five sessions, and Broadcom dropped 3.6%. The PHLX semiconductor index slid 2.5%, heading for an eighth straight daily loss. A jump of more than 3% in oil prices on Middle East supply concerns added to the gloom heading into the weekend.
What it means
The core worry is financing. Companies building AI data centers have borrowed heavily, and investors now doubt they will earn enough in time to repay that debt, especially if interest rates climb further. CoreWeave has become the symbol of that fear: its bonds sold off this week, pushing their yields above 15%, a level usually associated with distressed borrowers.
The mood is also being shaped by inflation. Hotter-than-expected consumer and producer price reports this week suggested price pressures are spreading beyond energy, raising the risk of further Federal Reserve rate increases. Higher rates hurt growth stocks most, because their valuations lean on profits expected far in the future. Reuters also reported that some Anthropic investors are weighing a lower valuation for its planned IPO, another sign that enthusiasm for AI pricing is cooling.
The flip side is in bonds. According to the FT, the rush for safety halted a long Treasury sell-off. The 10-year yield fell sharply on Thursday to about 5.06% from 5.19% and slipped to around 5.08% on Friday, according to Zacks and Motley Fool data. That is a rare bit of relief for borrowers after weeks of rising rates.
The selling has been concentrated. Defensive sectors such as healthcare, materials and financials gained on Thursday, and energy led on Friday morning. Next week brings third-quarter results from Tesla and Meta Platforms, a key test of whether AI spending is translating into profits; analysts expect overall earnings growth above 30%, according to LSEG data cited by Reuters.
The bull case
Earnings are still expected to grow strongly, led by the same AI megacaps now being sold, so the slide may reset valuations rather than signal a collapse. Lower Treasury yields ease pressure on stock valuations and on companies that need to borrow. If upcoming results from Meta and others show AI spending paying off, investors who stepped aside could return quickly.
The bear case
Eight straight days of chip-stock losses, distressed-level bond yields at CoreWeave and doubts over AI start-up valuations suggest the financing model behind the AI boom is under real strain. With inflation running hot and the Fed possibly tightening further, borrowing costs may stay high, and a market where most gains came from a handful of tech giants is vulnerable if they keep falling.
Why it matters
For investors
Tech-heavy indexes, chipmakers and AI infrastructure firms bear the brunt, while Treasuries and defensive sectors like healthcare are benefiting as investors seek safety.
The wider context
Many index funds and retirement accounts are heavily weighted toward a few large tech companies, so a sustained AI sell-off would show up in ordinary portfolios, even as lower bond yields help borrowers.
Market impact
| Asset (ticker) | Possible move | Timeframe | Why |
|---|---|---|---|
| Invesco QQQ Trust (QQQ) | ↓ Down | Short term | Nasdaq on course for a weekly drop above 4% as AI stocks slide. |
| CoreWeave (CRWV) | ↓ Down | Short term | Shares down about 25% in five sessions as its bond yields topped 15%. |
| iShares Semiconductor ETF (SOXX) | ↓ Down | Short term | Chip index heading for an eighth straight daily decline. |
| US 10-year Treasury yield | ↓ Down | Short term | Safe-haven buying pulled the yield back from recent highs. |
The FinPrism newsroom's view of how these figures could move, as of . It is general news commentary, not a recommendation to buy, sell or hold anything.
Frequently asked questions
Why are tech stocks falling this week?
Investors worry that companies building AI data centers borrowed too much and may not earn enough to repay debt in time, especially if rates rise. Hot inflation data and higher oil prices added pressure, pushing the Nasdaq toward a weekly loss of more than 4%.
How bad is this week's tech sell-off?
The Financial Times said Big Tech shares were on course for their biggest weekly drop since 'liberation day'. Reuters reported the Nasdaq was heading for a weekly loss of more than 4%, and the chip index for an eighth straight daily decline.
Why are Treasury yields falling while stocks drop?
When investors get nervous about stocks, many move money into government bonds, which are seen as safer. That buying pushes bond prices up and yields down. The 10-year Treasury yield eased to around 5.1% after weeks of climbing.
Sources: Financial Times, Reuters via Yahoo Finance, The Motley Fool, Zacks via Yahoo Finance
How this was made: written with AI assistance from the sources listed above, following our editorial standards.
