Stocks tied to artificial intelligence and computer chips are sliding, dragging broader markets lower and prompting investors to question how long the AI-fueled rally can last.
According to The New York Times, stocks sank on anxiety about technology and A.I. spending. The selling has been global. The Associated Press reports that Asian shares skidded, with Tokyo's Nikkei 225 index down more than 5%, as heavy selling of computer chipmakers and other AI-related shares dragged world markets lower and Wall Street followed.
The weakness in chip stocks has been persistent. Seeking Alpha reports that shares of memory and AI-related companies were lower for the third day in a row in Friday premarket trading, amid the Nikkei's slump and Chinese AI firms working to narrow the gap with the United States. Both Seeking Alpha and Yahoo Finance note the timing coincided with a powerful new AI model from the Chinese startup Moonshot.
The mood among investors appears to be shifting. Yahoo Finance reports that semiconductor stocks are on the verge of a bear market, with investors going "risk-off" — selling highflying chip stocks and rotating into other parts of the market that might benefit from a resilient economy. The outlet says investors seem to be second-guessing the trade that has powered much of the market's gains.
The downturn is unfolding against a jittery backdrop. The Associated Press reports that oil prices jumped as the United States launched more airstrikes on Iran, adding another source of uncertainty for markets already on edge.
Why it matters: AI and chip companies have been among the biggest drivers of stock market gains, so a sustained pullback in these shares can ripple through retirement accounts and the wider economy far beyond the tech sector.