U.S. technology stocks fell sharply Friday, pushing the Nasdaq Composite toward its lowest level in nearly three months as investors intensified their scrutiny of the enormous amount of capital being committed to artificial intelligence.
By late morning, the Nasdaq Composite was down about 2.5%, while the S&P 500 had fallen roughly 1.6% and the Dow Jones Industrial Average was off about 0.7%. The Philadelphia semiconductor index dropped approximately 7%.
The selling was concentrated in technology.
Intel plunged roughly 30%, putting the shares on course for their largest one-day decline, after the chipmaker issued a weak revenue outlook and warned that heavy investment and deteriorating PC-market conditions were weighing on cash generation.
Amazon also declined as investors focused on the extraordinary cash requirements of its AI infrastructure program. The market reaction extended beyond individual earnings reports and developed into a broader reassessment of technology-sector capital spending.
The damage spread across semiconductor stocks, while investors moved toward more defensive areas of the market.
The selloff represents an important change in the AI trade. Investors are increasingly demanding evidence that massive infrastructure spending can generate adequate free cash flow and returns on invested capital rather than rewarding spending simply because it produces rapid AI-related growth.
Higher interest rates add another constraint. Expensive borrowing makes increasingly capital-intensive data-center development more costly and raises the return threshold that AI projects must clear.
Treasuries attracted demand during the risk-off move, sending yields lower as investors reduced exposure to higher-risk assets.
The next test is whether the technology selloff remains concentrated among companies facing cash-flow and spending concerns or develops into broader de-risking across U.S. equities.
For investors, the central question is shifting from how quickly AI infrastructure can be built to whether the economic returns from that infrastructure can justify its rapidly escalating cost.
