Nasdaq tumbles 2%, heads for worst week since June as investors rotate out of AI trade

Stocks slid on Friday as traders headed for a mostly losing week amid a shift away from tech and artificial intelligence-related names.

The S&P 500 traded down 1.2%, while the Nasdaq Composite shed 2.2%. The Dow Jones Industrial Average outperformed as it fell 268 points, or 0.5%.

Chipmakers were lower again. The VanEck Semiconductor ETF (SMH) lost 1%, led by declines in Micron Technology, Advanced Micro Devices and Sandisk. Semiconductors have struggled this week amid jitters about competition from China. The SMH is down 8% week to date, on pace for its biggest weekly decline since July.

Those declines, coupled with drops in other stocks linked to AI, put the S&P 500 on pace for a losing week. The benchmark index is down 2% this week, while the Nasdaq has shed more than 4%. The tech-heavy index was on track for its worst weekly performance since June. The Dow, on the other hand, has moved higher by less than 1% on the week.

Investors have also grown concerned that tech companies are borrowing too much for the AI buildout. Shares of neoclouds like CoreWeave, which has seen its total debt rise to more than $51 billion, were down 10%, putting the stock’s week-to-date losses at more than 23%.

“The question is: Is this a systemic issue?” said Michael Rosen, Angeles’ chief investment officer. “Obviously, increased debt issuance is something to observe and continue to watch and be concerned about if it continues to get to levels of excessiveness. But we’re not remotely close to that right now.”