A wave of selling in artificial intelligence stocks rattled markets this week, dragging Wall Street toward a losing week and sparking fresh debate over whether the AI rally has gone too far.
According to the Associated Press, reported across outlets including the Star Beacon and mcall.com, most of the U.S. stock market actually rose Friday as oil prices eased back to where they sat before the war with Iran. But sliding AI shares kept the broader market in check, pushing the S&P 500 toward its second weekly decline. CNN described it bluntly: AI stocks are melting down again.
The pressure was global. The Daily Sitka Sentinel and Audacy reported Asian shares plunged as traders sold to lock in profits after recent AI-driven rallies. Indian Express reported the South Korean market crashed 10% on Tuesday, triggering a circuit breaker that halted trading amid fears of an AI bubble bursting.
Chipmakers bore the brunt. The Motley Fool reported Broadcom, Micron, AMD and other AI chip stocks slumped Friday, while The Globe and Mail noted Broadcom has fallen more than 22% from its peak. Per Benzinga, analyst Dan Ives pointed to a widening split within the AI trade, with investors favoring Micron over Microsoft, which 24/7 Wall St. reports is down 25% this year. Not all names suffered—Ad-hoc-news.de reported Taiwan Semiconductor hit a fresh record.
The warnings grew louder. Bloomberg reported Chinese hedge funds are calling the AI 'super bubble' ready to burst, and 24/7 Wall St. highlighted investor Jeremy Grantham's caution that U.S. stocks could plunge 70% in what he calls the most expensive market in history. Business Insider tied the slump to both AI slowdown fears and Iran war escalations.
Why it matters: AI optimism has powered much of the market's gains, so a sustained pullback in these stocks could ripple far beyond tech into the retirement accounts and index funds of ordinary investors.