Chip Selloff Hits Wall Street as AI Return Concerns Deepen

Semiconductor shares extended their slide on Friday, October 16, putting pressure on major US stock indexes as investors scrutinised the financial returns from artificial-intelligence infrastructure spending. The Nasdaq 100 fell 1.8%, while a major chipmakers’ index recorded its eighth straight session of losses—the latter’s longest losing run since 2008. Technology weakness also dragged on the S&P 500 despite gains in most of its constituent stocks. Economic Times Markets, citing Bloomberg, reported the moves; these figures represent a source-reported market snapshot, not a live price service.

CoreWeave dropped 9.5% as concerns persisted that AI infrastructure investment was running ahead of the profits it could generate. Fawad Razaqzada of Stonex Trading and Forex.com described a shift in investor attention: rather than focusing mainly on the scale of AI’s potential, markets were asking whether the spending needed to capture it would pay off. Demand for chips and computing capacity remained strong, but investors wanted firmer evidence of adequate returns from data centres, electricity generation, networking and related infrastructure. The report also described signs of those concerns reaching credit markets. Higher interest rates compounded the pressure by making infrastructure financing more expensive and lowering the present value of anticipated earnings.

Demand for US Treasuries helped government bonds recover some earlier losses. The report identified Kevin Warsh as Federal Reserve chairman and said his remarks at the International Monetary Fund’s annual meetings in Bangkok left expectations of unchanged interest rates that month largely intact. He reiterated the central bank’s price-stability commitment without offering an economic or policy outlook, and declined to prejudge its remaining meetings of the year. Meanwhile, Brian Jacobsen of Annex Wealth Management highlighted investors’ response to the week’s developments: as several AI-linked shares retreated, money moved towards healthcare, financials, materials and smaller-company stocks, which performed relatively better. The trading pattern showed weakness concentrated in the AI trade rather than uniform losses across equities.