Tech stocks slump as AI debt fears and inflation data weigh on Wall Street

Investors sold off technology stocks on Friday, driving the Nasdaq Composite down 573 points, or 2.1%, to close at 26,140. The decline marked the index's worst week since June, while the S&P 500 fell 1.1% and the Dow Jones Industrial Average dropped 0.3%. The sell-off was fueled by concerns over the heavy borrowing required for artificial intelligence infrastructure and fresh signs of rising U.S. inflation.

Chipmakers and neocloud providers faced particular pressure as markets reassessed the financial viability of the rapid data center buildout. CoreWeave, a company that provides computing power for AI models, saw its shares slide nearly 12% on Friday and fall roughly 24% for the week. Adam Crisafulli, head of Vital Knowledge, told CBS News that such companies finance capital expenditures through debt and equity issuance rather than cash flow, a structure that has raised alarms about mounting liabilities.

Other major technology names followed suit. Micron Technology declined 5.6%, Advanced Micro Devices dropped 6%, Broadcom fell 4.5%, and Intel lost 5.8%. Tesla shares also retreated by 2.1% after the company unveiled a new Roadster sports car with aerodynamic features that appear to allow it to lift off the ground.

Underlying these moves was uncertainty regarding Anthropic, an AI firm expected to go public soon. Crisafulli noted in a client report that investors are questioning whether the company can sustain its revenue momentum. Reuters reported on Thursday that Anthropic's backers are now considering a valuation of $1.5 trillion, a reduction from an earlier target of $2 trillion.

Inflation data added to the bearish sentiment this week, with readings suggesting price increases are moving further from the Federal Reserve's 2% annual target. Yields on 10-year U.S. Treasury bonds remained steady at 5.1% on Friday after surging earlier in the month to levels unseen in more than two decades. Some economists argue that persistent inflation could prompt the Federal Reserve to raise interest rates at its October 28-29 meeting, although most Wall Street traders currently expect the central bank to hold its short-term rate steady.

However, the probability of a rate hike at the December meeting has risen to 74.3%, up from 50.2% a month ago, according to CME FedWatch data derived from Fed funds futures prices. Federal Reserve Chairman Kevin Warsh offered no guidance on future policy moves while attending a gathering of financial leaders in Bangkok. The Fed most recently raised rates in September, setting the federal funds rate between 3.75% and 4%, its highest level since December 2025.