BY EMMANUEL OGBONNA
Wall Street looked set to open lower on Friday as another wave of selling swept through technology stocks, extending a difficult week for companies at the center of the artificial intelligence boom.
Investors continued to pull back from high-flying semiconductor shares amid growing concerns that soaring valuations may have outpaced realistic earnings expectations.
Futures tied to the S&P 500 fell 0.6% before the opening bell, while Dow Jones Industrial Average futures slipped 0.2%. Nasdaq futures dropped 1.4%, putting the technology-heavy index on course for a weekly decline of more than 5%, marking its second major weekly setback this month.
The latest market weakness reflects increasing uncertainty surrounding the artificial intelligence sector, which has fueled one of the strongest stock market rallies in recent years. Investors have begun questioning whether the enormous capital flowing into AI infrastructure and semiconductor companies can continue to generate profits sufficient to justify their lofty market valuations.
Leading chipmakers came under renewed pressure in premarket trading. Shares of Micron Technology dropped 5%, while Intel fell 3.6%. Broadcom and Qualcomm also traded nearly 2% lower as investors continued reducing exposure to AI-related stocks following weeks of heightened volatility.
Adding to investor caution is the growing expectation that the Federal Reserve could raise interest rates later this year as inflationary pressures remain persistent. Higher borrowing costs typically weigh on fast-growing technology companies because future earnings become less valuable when discounted at higher interest rates. The prospect of tighter monetary policy has therefore intensified concerns surrounding richly valued AI companies.
The weakness in U.S. markets mirrored a sharp sell-off across Asia, where technology shares have experienced dramatic swings in recent trading sessions.
Japan’s Nikkei 225 index closed down 4.2% at 69,360.88 after recovering from even steeper losses earlier in the day. South Korea’s Kospi index tumbled 5.8% to 8,411.21, also rebounding somewhat before the close as bargain hunters stepped in.
Market volatility has become increasingly common across Asia as investors react to rapidly changing expectations surrounding artificial intelligence spending. Massive investments in AI data centers, semiconductor manufacturing, and cloud computing infrastructure have driven stock prices sharply higher throughout much of the year, but concerns about long-term demand and profitability have recently sparked equally dramatic declines.
Only a day earlier, markets in Japan and South Korea had reached fresh record highs following stronger-than-expected earnings reports from Qualcomm and Micron Technology, highlighting just how quickly investor sentiment has shifted.
South Korea’s stock market remains particularly sensitive to developments in the semiconductor industry because of the dominant role played by Samsung Electronics and SK Hynix. Both companies are major suppliers of advanced memory chips used in artificial intelligence systems and maintain close partnerships with Nvidia, whose processors have become the backbone of AI computing worldwide.
Reflecting the changing mood, Samsung Electronics shares fell 5.3% on Friday, while SK Hynix plunged 8.4%. In Japan, technology investment giant SoftBank Group dropped 12.5%, making it one of the session’s biggest losers, while semiconductor testing equipment manufacturer Advantest declined 3.2%.
Market analysts noted that investor sentiment has become increasingly sensitive to any new information regarding AI demand, capital spending, or memory chip pricing.
Stephen Innes of SPI Asset Management said the heavy concentration of market gains in a relatively small group of AI-related companies has amplified volatility. According to Innes, stronger-than-expected earnings from companies such as Micron can trigger powerful rallies, but even modest concerns about future memory pricing, capital expenditure, or the sustainability of AI demand can quickly reverse those gains.
Elsewhere in Asia, Hong Kong’s Hang Seng Index fell 1.8% to 22,667.13, while China’s Shanghai Composite Index declined 2.3% to 4,027.26. Taiwan’s Taiex index dropped 3.6%, reflecting widespread weakness across the region’s technology sector.
Australia stood out as one of the few bright spots. The S&P/ASX 200 edged up 0.2% to finish at 8,764.20, supported by gains outside the technology sector.
Analysts observed that while AI-related stocks have experienced significant turbulence, much of the broader equity market has remained comparatively resilient. Thomas Mathews of Capital Economics noted that sectors less dependent on artificial intelligence have largely avoided the severe price swings affecting semiconductor and technology companies.
He suggested that even if enthusiasm surrounding artificial intelligence were to fade significantly, many non-technology industries could continue performing relatively well, as demonstrated by their stability during the latest bout of AI-driven market volatility.
European markets also traded lower as investors adopted a cautious stance. Germany’s DAX index declined 1.3%, France’s CAC 40 fell 0.8%, and Britain’s FTSE 100 slipped 0.9%.
Meanwhile, energy markets continued to stabilize following weeks of geopolitical tensions in the Middle East. Brent crude, the international benchmark for oil prices, fell $1.85 to $73.65 per barrel. Prices have steadily retreated after surging above $100 during disruptions caused by the temporary closure of the Strait of Hormuz, which significantly affected global oil shipments.
U.S. benchmark West Texas Intermediate crude also moved lower, declining $1.62 to $70.30 per barrel. Before the conflict involving the United States, Israel, and Iran escalated in late February, crude prices had been trading closer to $67 per barrel.
Investors will continue monitoring inflation data, central bank signals, and corporate earnings in the coming weeks as markets assess whether the recent correction in AI-related stocks represents a temporary pause in the sector’s rally or the beginning of a broader reassessment of technology valuations.
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