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Tech stocks tumble as AI debt fears rattle Wall Street
CBS News • • business
Key Points:
- Financial markets experienced a significant decline on Friday, with the Nasdaq Composite dropping 2.1%, marking its worst week since June, amid investor concerns over technology stocks tied to artificial intelligence (AI).
- Chipmakers and neocloud companies like CoreWeave faced heavy selling pressure due to worries about their high debt levels and capital expenditures financed through borrowing rather than cash flow.
- Shares of CoreWeave fell nearly 12% on Friday and about 24% over the week, while major tech firms such as Micron Technology, AMD, Broadcom, and Intel also saw notable declines.
- Investor anxiety was heightened by doubts over AI company Anthropic's ability to sustain revenue growth, with its valuation potentially dropping from $2 trillion to $1.5 trillion ahead of its public offering.
- Rising U.S. inflation and steady high yields on 10-year Treasury bonds have increased expectations for a possible Federal Reserve interest rate hike in December, despite most traders anticipating no change at the upcoming October meeting.
