US stocks closed sharply lower on Friday as renewed selling in artificial intelligence companies and semiconductor manufacturers dragged down the major indexes, capping a difficult week for technology shares.

The Nasdaq Composite declined 2.15%, while the S&P 500 fell 1.10% to 7,659.44. The Dow Jones Industrial Average slipped 0.36% to around 52,002, with technology stocks bearing the brunt of the losses.

The retreat reflected growing concerns about the sustainability of the AI infrastructure boom, particularly as companies increasingly rely on borrowed money to finance expensive data center projects. Rising oil prices added further pressure on investor sentiment, compounding inflation concerns that followed Wednesday's stronger-than-expected US consumer price report.

AI Infrastructure Debt Concerns Deepen Technology Selloff

Friday's decline followed several sessions of pressure on chipmakers and the companies supplying computing infrastructure for artificial intelligence, a sector whose data center buildout requires heavy upfront spending on chips, facilities, and power capacity.

Nvidia-backed CoreWeave remained a focal point of investor anxiety after a sharp selloff in its corporate bonds pushed yields above 15%, underscoring mounting doubts about the risks tied to heavily indebted AI infrastructure providers. Corporate bond yields rise when investors demand greater compensation for holding a company's debt, so a double-digit yield highlights how expensive new borrowing has become for issuers carrying large debt loads. Other cloud infrastructure companies, including Nebius and IREN, also came under pressure during the session as investors reassessed the financing behind large-scale computing projects.

Semiconductor stocks extended their losses, with Intel declining 5.8% and Micron Technology falling 5.6%.

The weakness stands in contrast to a strong rally in AI-related equities earlier in the year, which had been driven by expectations of continued investment from major technology companies. Rising financing costs have since raised questions over whether revenues generated by AI services can justify the scale of infrastructure spending.

The concerns have also spread to private AI companies. Reuters reported on Thursday that some Anthropic investors are considering a valuation of approximately $1.5 trillion for the company's planned November initial public offering, down from earlier expectations near $2 trillion, despite its rapid revenue growth. The listing is likely to be closely watched as the next major checkpoint for how public markets value large AI companies at a time of heightened scrutiny of the sector's spending.

Rising Oil Prices and Inflation Add Pressure to Wall Street

The technology selloff coincided with a surge of more than 3% in oil prices on Friday, driven by concerns over potential supply disruptions in the Middle East.

Higher energy costs have compounded inflation worries after September US consumer prices rose 0.6% month over month and 3.7% annually, exceeding expectations. The report stoked concerns that the Federal Reserve could maintain restrictive monetary policy or raise interest rates further, potentially making financing more expensive for companies investing heavily in AI infrastructure.

Elevated borrowing costs also weigh on growth stock valuations by reducing the present value of expected future earnings, which is why upcoming inflation readings and Federal Reserve communications are likely to remain focal points for traders.

For the week, the Nasdaq declined approximately 4.5%, its worst performance since June, while the S&P 500 lost 1.9%. The Dow managed a weekly gain of 0.7%, reflecting relatively stronger performance outside the technology sector.

Despite the pullback, the Nasdaq and S&P 500 remain up approximately 12.5% and 11.9%, respectively, for the year. The latest selloff highlights growing investor scrutiny of AI infrastructure spending after months of strong gains in technology stocks.