Tech Rout Deepens as AI Leaders Slide, Pulling U.S. Stocks Lower

U.S. stocks closed sharply lower Friday as selling pressure intensified in technology shares, with renewed concerns over artificial-intelligence spending prompting investors to rotate out of the market’s most crowded trades.

The Nasdaq Composite fell 398.69 points, or 1.69%, to 23,195.20, leading losses among major benchmarks. The S&P 500 declined 73.59 points, or 1.07%, to 6,827.41, while the Dow Jones Industrial Average dropped 245.96 points, or 0.51%, to 48,458.10. Small-cap stocks also retreated, with the Russell 2000 sliding 1.51% to 253.90.

The pullback followed a sharp reversal in several artificial-intelligence bellwethers after Broadcom Inc. issued a weaker-than-expected outlook, unsettling a market that has relied heavily on AI-related earnings growth throughout the year. According to Bloomberg, Broadcom shares fell roughly 12%, weighing on semiconductor peers and companies tied to data-center infrastructure and power demand.

Bloomberg also reported that Oracle Corp. shares extended losses amid concerns that rising capital expenditures and a longer runway to revenue realization could dampen near-term returns from AI investments. The report cited delays affecting some of Oracle’s data-center projects, compounding investor anxiety over the pace of AI monetization.

The decline marked a sharp turn after recent record highs for major indexes. The S&P 500 had notched a fresh closing peak in the prior session, leaving the market vulnerable to profit-taking as year-end approaches. By Friday’s close, market internals underscored the breadth of the retreat, with declining stocks outpacing advancers by roughly two-to-one.

Technical indicators also softened. Just over 52% of stocks remained above their 50-day moving averages, while about 45% sat below their 200-day averages, suggesting momentum has begun to erode beneath the surface even as headline indexes remain elevated.

The session reinforced growing unease that the AI trade, one of the dominant drivers of 2025 market performance, may be entering a more volatile phase. While long-term enthusiasm for artificial intelligence remains strong, investors appear increasingly sensitive to earnings visibility, spending discipline, and execution risk among the sector’s largest beneficiaries.

Read A step-by-step guide to the AI bubble