Tech Stocks Drop as AI Spending Concerns Boost US Bonds and Oil Rises

Global technology stocks experienced a sharp decline on Friday as investors grew increasingly cautious about the escalating expenditures on artificial intelligence projects and their uncertain financial returns. This risk aversion led to a surge in US government bonds, which edged toward their largest monthly advance in nearly three years.

Market indicators showed futures pointing toward further losses on Wall Street, with the tech-focused Nasdaq 100 expected to fall by more than 2.5 percent. The after-hours trading session saw significant setbacks for key industry players. Intel's shares plunged 25 percent following disappointing results that highlighted substantial cash burn. Amazon’s stock also fell by 6 percent amid concerns over spending levels.

Alphabet, the parent company of Google, suffered a striking 12.6 percent drop during regular trading on Thursday, followed by an additional decline after hours. This downturn erased approximately $500 billion in market value. The steep fall was attributed to heavy investments in AI initiatives that pushed the company’s cash flow into negative territory.

European stock markets closed lower by 0.3 percent on Friday, a relatively moderate decline compared to the tech sector’s turmoil. The smaller presence of large technology firms in European indices helped limit losses. Meanwhile, Asian markets were also under pressure, particularly in the semiconductor segment. South Korea’s Kospi index dropped 3.5 percent to 5,730.74, influenced by declines in major chipmakers SK Hynix and Samsung Electronics.

Investors are questioning the potential returns from the substantial capital outlays required to develop AI infrastructure. There is also apprehension about the broader economic impact if rising costs lead to higher prices for consumer electronics such as smartphones and personal computers, potentially dampening global demand.

Another focal point for market watchers is the upcoming initial public offering (IPO) of Anthropic, an AI startup. Industry analysts regard this debut as a critical test of investor sentiment toward the AI sector. Jason Da Silva, co-chief investment officer at Arbuthnot Latham, commented, "The next key milestone will be the Anthropic IPO, to see how that lands. If it’s a poor listing, I think that could signal a bit of weakness going forward." The outcome of this IPO may influence the willingness of investors to back AI ventures in the near term.

Market nerves were further shaken by a major hacking incident at Binance, the world’s largest cryptocurrency exchange. The cyberattack, potentially one of the largest ever recorded, triggered a selloff in Bitcoin and other digital currencies. Bitcoin reached a six-week low before recovering slightly to trade 1.7 percent lower at $77,471.

Geoffrey Kendrick, head of digital assets research at Standard Chartered, noted, "I suspect the negative price action still has some way to go. Only after assets are unfrozen and more detail of the hack emerges will we find a new base." This uncertainty has left cryptocurrency investors cautious amid ongoing security concerns.

On the commodities front, oil prices climbed more than 2 percent on Friday, positioning the market for a fourth consecutive monthly gain. The rise was driven by an attack on a tanker in the Strait of Hormuz, a strategic waterway that remains vulnerable due to ongoing conflicts in West Asia. Supply risks from the region continue to influence global energy markets.

In contrast, gold prices fell to their lowest point since mid-July, trading around $1,970 per ounce. The precious metal is on track for a second straight monthly decline as rising oil prices and persistent inflation worries reinforce expectations that central banks may maintain tighter monetary policies for longer.

Overall, the financial markets are navigating a complex environment where technological innovation, geopolitical tensions, and economic uncertainty intersect. The heavy investments in AI by leading tech firms are under scrutiny as investors seek clearer evidence of profitable returns. At the same time, developments in energy markets and digital assets add layers of complexity to the investment landscape heading into the summer months.