Global stocks tumbled on Friday after a sell-off in technology shares amid growing investor unease around the eye-popping spending on artificial intelligence.
Futures trading was down nearly 1 percent for the S&P 500 and 1.5 percent the tech-focused Nasdaq, pointing to declines when U.S. trading begins.
Investors have begun to raise questions about whether the vast amounts of money, much of it borrowed, that is being spent on artificial intelligence will bear the expected returns. Companies are investing billions in A.I. infrastructure like data centers and factories to meet ever-increasing demand for chips.
Excitement over A.I. technology, its rapid pace of improvement and its world-changing possibilities have led to dizzying rally in tech stocks and staggering valuations.
But skepticism is growing over the potential for revenue growth that matches the enormous spending by A.I. giants.
Adding to concerns about the risks facing markets on Friday were renewed strikes between the United States and Iran. The passage of ships through the Strait of Hormuz, a vital waterway for the trade in energy and related products, have pushed up oil prices again and led to concern over rising inflation. Brent crude, the global oil benchmark, was trading at nearly $86 a barrel on Friday.
Earlier, stocks tumbled across Asia led by a plunge in technology shares.
Taiwan’s Taiex index fell 6.5 percent, a day after the chip-making giant Taiwan Semiconductor Manufacturing Company announced an extra $100 billion investment on operations in the United States. Shares in TSMC fell more than 7 percent on Friday
Analysts at BNY, a New York bank, said in a report that Taiwanese stocks saw a record level of selling by foreign investors on Friday. They cited a reassessment by investors of the valuations of the biggest tech companies and “fiercer” competition from Chinese companies, but held back from projecting a deeper gloom.
“This is not the A.I. or semiconductor growth story collapsing,” they wrote.
Japan’s Nikkei 225 was down more than 4 percent. The KOSPI index in South Korea, a bellwether of A.I. investments, is up more than 60 percent this year but has had drastic daily rises and falls. The country’s markets were closed on Friday for a holiday.
In Europe, the Stoxx 600, an index that tracks the region’s largest companies, fell 0.6 percent. Germany’s DAX index slid 0.7 percent. Shares in the Dutch powerhouse ASML, which makes equipment crucial to chip manufacturing, were down more than 3 percent.
The Philadelphia Semiconductor index, which tracks semiconductor companies, is down 8.4 percent this week and 19 percent from its high in June.
