AI Stock Slump Drags Wall Street Lower for the Week

The AI stock slump weighed on Wall Street Friday, offsetting gains across much of the broader market as investors continued to pull back from some of this year’s biggest technology winners.

Although lower oil prices and easing Treasury yields supported many sectors, major artificial intelligence companies remained under pressure. The S&P 500 slipped less than 0.1%, marking only its second weekly decline in the past 13 weeks. The Dow Jones Industrial Average lost 0.1%, while the Nasdaq Composite fell 0.2%.

AI stocks continue to pressure the market

Artificial intelligence companies have driven much of Wall Street’s rally over the past year. However, investors have increasingly questioned whether future earnings can justify their lofty valuations.

Micron Technology dropped 5.5%, becoming one of the biggest drags on the S&P 500. The memory-chip manufacturer has seen its shares surge this year thanks to booming AI demand, but concerns are growing that rising memory prices could eventually weaken consumer demand for technology products.

Those fears intensified after Apple announced it would raise prices on laptops and other devices to offset higher component costs.

Meanwhile, SpaceX shares briefly fell nearly 3% before recovering some losses. The company has experienced sharp volatility since its highly anticipated initial public offering earlier this month.

Lower oil prices provide support

Despite weakness in technology, lower energy prices helped limit broader market losses.

Brent crude fell 3.8% to $72.60 per barrel, dropping below levels seen before the conflict involving Iran disrupted global energy markets.

Lower fuel costs benefited airline stocks, with United Airlines gaining 1.3% as investors anticipated reduced operating expenses.

The decline in oil prices also reflected easing concerns about global supply following progress in Middle East negotiations.

Healthcare stocks lead gains

Healthcare companies were among Friday’s strongest performers after European regulators recommended several new drug approvals and expanded therapeutic uses.

Eli Lilly climbed 7% following positive recommendations from the European Medicines Agency, making it one of the day’s best-performing large-cap stocks.

Overall, roughly three out of every five companies in the S&P 500 finished higher, highlighting how concentrated losses in AI-related shares continued to dominate the major indexes.

Treasury yields ease as inflation expectations cool

Bond markets also provided some relief for investors.

The yield on the 10-year U.S. Treasury note fell to 4.37% from 4.40% a day earlier after new data showed Americans expect slightly lower inflation over the coming year.

Lower Treasury yields generally support equity markets because they reduce borrowing costs and improve valuations. However, they have not been enough to reverse recent selling pressure in expensive AI stocks.

Asian markets hit by technology selloff

The weakness spread across global markets before U.S. trading began.

Japan’s Nikkei 225 fell 4.2%, led by a 12.5% decline in SoftBank Group, a major investor in OpenAI. Reports suggesting OpenAI may postpone its anticipated initial public offering until next year weighed heavily on investor sentiment.

In South Korea, SK Hynix lost 8.4% while Samsung Electronics declined 5.3%, contributing to a 5.8% drop in the Kospi index.

Investors reassess AI valuations

The recent AI stock slump reflects growing caution among investors after extraordinary gains across the sector.

Many of the largest AI companies remain highly profitable, but analysts increasingly argue that market expectations have become difficult to sustain. As investors rotate into healthcare, industrials, and other sectors benefiting from lower oil prices, technology stocks continue to face heightened scrutiny.

While the broader market remains near record highs, the performance of AI leaders will likely continue to play an outsized role in determining Wall Street’s direction over the coming months.