Why It Matters
Technology stocks suffered their weakest week since June as investors weighed higher interest rates, rising oil prices and the debt carried by companies supplying computing power for artificial intelligence. The decline came only 10 days after the Nasdaq Composite and S&P 500 reached record highs.
What Happened
The Nasdaq fell 2.14% Friday and finished the week down roughly 4.5%. The S&P 500 declined 1.09% Friday and lost almost 2% for the week.
Concern about AI-related borrowing focused attention on CoreWeave, a neocloud backed by Nvidia that went public in 2025. Neoclouds rent computing capacity to AI companies, and CoreWeave has tens of billions of dollars in debt.
CoreWeave’s bond yields climbed to levels associated with financial distress or increased default risk. Nvidia CEO Jensen Huang endorsed the company Thursday, helping its stock rally that day, but shares fell almost 12% Friday. CoreWeave lost one-quarter of its value during the week and has declined more than 65% from its peak shortly after its March 2025 initial public offering.
Gil Luria said the company’s returns may not be sufficient to repay its borrowing. “It’s unclear that (CoreWeave is) going to get a sufficiently good return to pay down the debt that they borrowed,” Luria said.
By the Numbers
- 2.14%: Nasdaq decline Friday.
- 4.5%: Approximate Nasdaq weekly loss.
- $110: Brent crude price per barrel Friday, its highest level since May.
- 3.8%: Friday decline in a semiconductor chip-stock index.
- 20%: Increase in the VIX, which moved above 20 points.
Zoom Out
Semiconductor stocks fell for an eighth consecutive day. The chip-stock index dropped 11.4% for the week, its weakest comparable performance since April 2025, and is down more than 20% from its June peak despite remaining up more than 50% this year.
Earlier in the week, CXMT announced progress on advanced memory chips. South Korea’s Kospi, which is heavily weighted toward chipmakers SK Hynix and Samsung Electronics, fell 14.5% for the week, its worst performance since 2008. The index had gained 116% by June before giving back those gains over six months; it now holds a 35% year-to-date increase.
Semiconductor companies account for roughly one-fifth of the S&P 500’s market value, leaving the broader index exposed to moves in the industry. The VIX, a measure of expected market volatility, rose more than 20% Friday and moved above 20 points.
What’s Next
Investors will continue weighing AI companies’ debt loads, the outlook for interest rates, oil prices and semiconductor valuations. Thomas Martin summarized the immediate market reaction: “The market sells first, asks questions later.”
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