U.S. technology stocks led a weekly market decline through Oct. 16 as investors weighed the borrowing behind artificial intelligence expansion, putting financing costs in focus ahead of major technology earnings.
The Nasdaq Composite lost 4.5% over the week, compared with a 1.9% decline in the S&P 500, the Associated Press reported. On Friday, the Nasdaq closed at 26,140.03, down 2.14%, while the S&P 500 finished at 7,659.44, down 1.09%. The Nasdaq PHLX Semiconductor Index fell 3.83% to 11,137.29.
Investors also focused on how AI infrastructure is being financed. Reuters reported Oct. 15 that CoreWeave, a cloud computing company, had about $50 billion in debt and that one of its bonds yielded around 15%. Investors were weighing whether future AI revenue would cover the cost of the buildout, Reuters reported.
Axios reported that smaller AI cloud providers depend more heavily on borrowing to expand than major technology firms do. It said CoreWeave’s five-year credit default swaps neared 1,100 basis points on Oct. 15. Axel Rudolph, chief technical analyst at IG Group, told Reuters that AI demand alone does not establish a profitable business model.
The financing questions had surfaced before Friday’s decline.
Monday marks 39 years since the Oct. 19, 1987, market crash. Securities and Exchange Commission historical material records a 22.6% one-day drop in the Dow Jones Industrial Average that day. The latest Nasdaq loss was measured over a week and involves a different index; the anniversary alone does not show that current market conditions resemble 1987.
FXStreet, in an article published at 3:02 a.m. ET (07:02 UTC) Monday, cited unnamed Deutsche Bank strategists who said S&P 500 futures were up 0.79% and Nasdaq futures were up 1.29%. The outlet also reported their view that AI-related shares had been a leading source of investor unease the previous week.
Investors are looking ahead to major technology company earnings this week, Yahoo Finance reported.
