Global technology stocks experienced a turbulent week, with the artificial intelligence-driven rally facing multiple headwinds. A selloff that began on Monday intensified, spreading across markets from South Korea to the United States, as investors grew uneasy about the scale of AI infrastructure spending, increasing reliance on debt financing, and the prospect of higher interest rates.
The turmoil was sparked by SpaceX's decision to launch a major bond offering shortly after its stock market debut. This move revived worries that technology firms may be spending too aggressively and that the AI investment boom is becoming increasingly dependent on borrowing. The concerns are particularly acute given that the world's biggest technology companies—Alphabet, Amazon, Microsoft, Meta, and Tesla—have collectively pledged hundreds of billions of dollars to expand computing infrastructure and build out AI capabilities, with hyperscalers estimated to spend more than $700 billion in 2026 on AI-related capital expenditure.
South Korea's benchmark KOSPI index, which has nearly doubled this year, plunged as much as 10% in a single session on Tuesday before recovering, but ended the week down 5.8%, posting a weekly loss of 6%—its steepest decline since early March when the Iran conflict unsettled global markets. In the United States, the tech-heavy Nasdaq Composite closed 2.2% lower on Tuesday and fell another 0.95% on Friday, while the S&P 500 slipped 0.6%.
A strong set of earnings from memory-chip maker Micron Technology on Wednesday initially helped stabilize sentiment. Micron, the only US-based producer of high-bandwidth memory chips used alongside Nvidia's AI processors, reported robust demand and disclosed that customers had committed $22 billion to secure supplies. The results temporarily eased fears about demand and reinforced confidence in AI-related spending. However, the recovery proved short-lived.
The market's mood deteriorated again after Apple announced on Thursday that it was raising prices on iPads and MacBooks in response to soaring memory and storage costs. Apple shares fell more than 6% on Thursday, though they recovered on Friday. The move highlighted an increasingly uncomfortable possibility for investors: that the AI boom may be inflationary rather than deflationary. Chris Beauchamp, chief market analyst at IG, noted that "a battalion of worries" was driving the market lower, adding that "Apple and Microsoft's price rises have struck at the market's fear of inflation, raising worries that, far from being deflationary, the AI boom might be inflationary, particularly for the hard-pressed consumer."
Investor confidence was also dented by reports that OpenAI may delay its public listing until next year. This move would be seen as a sign that even leading AI companies are cautious about the current market environment. The combination of factors has led to what Kathleen Brooks, research director at XTB, described as a "hand to mouth tech rally" that has "come to an abrupt halt."
The week's events have raised fresh questions about whether the AI-fuelled market rally is becoming too volatile for comfort. With the Federal Reserve expected to maintain a more aggressive stance on interest rates as inflation remains elevated, and with tech companies continuing to spend heavily on AI infrastructure, investors are increasingly seeking clearer evidence of future returns. The divergence between the AI-driven stock rally and the sluggish US economy has only added to the unease.
As the week closed, the tech sector remained under pressure, with the Nasdaq and S&P 500 both ending lower on Friday. The brief relief provided by Micron's results was overshadowed by the broader concerns about AI spending, debt financing, and inflation. Investors will be watching closely for any signs of stabilization in the coming weeks, as the market grapples with the implications of a potentially inflationary AI boom.
This article is for informational purposes only and does not constitute financial advice.
