Elevated borrowing costs and the growing financial burden tied to artificial intelligence investment kept pressure on technology-sector equities throughout the week. By Friday's close, the Nasdaq Composite had shed around 2.5%, pushing its five-day decline to nearly 5% — a stretch of losses that left the technology-weighted index on course for its steepest weekly drop since June.

A weekly decline exceeding 2% left the S&P 500 at its lowest point in that span since June, with Friday's session alone accounting for a 1.4% drop. Both the Nasdaq and S&P 500 had touched all-time peaks a little over a week before the period under review.

Equity markets lost ground in the days that followed, as unease took hold over whether elevated borrowing costs could squeeze debt-dependent segments of the artificial intelligence sector. Neoclouds — companies that rent out computing infrastructure to businesses fuelling the growth of artificial intelligence — came under increased examination.

CoreWeave (CRWV) — backed by Nvidia and trading publicly after its 2025 stock market debut under the neocloud banner — drew attention from investors navigating an unsettled landscape in the cloud computing space. Borrowing to accelerate expansion has left CoreWeave carrying a debt load running into the tens of billions of dollars on its books.

Bond yields for the company climbed to levels associated with elevated default risk. Gil Luria, who leads technology research at D.A. Davidson, questioned whether the returns CoreWeave generates would be sufficient to cover the debt it took on.

In an interview with a major news outlet, Luria placed companies in that position at the most exposed tier of AI infrastructure investment, arguing that this vulnerability helps account for why their share prices tend to be among the earliest to retreat when investors grow cautious about the trajectory of buildout spending. Luria also noted that while demand for AI products and services continues to grow, firms such as CoreWeave contend with an offsetting pressure — funding arrangements that some observers regard as hard to maintain over time, a challenge compounded by elevated borrowing costs.

Nvidia chief executive Jensen Huang spoke publicly on Thursday, telling a broadcast outlet that he holds a positive view of CoreWeave — remarks that coincided with a rise in the company's share price that same day. Shares gave back 14% of their value by the close of trading that Friday, and CoreWeave stock ended the week down roughly 25% from where it had opened. Priced at its March 2025 IPO level, the stock has surrendered more than 60% of that value in the period since.

The Philadelphia Semiconductor Index posted a 3.9% retreat on Friday, extending a losing run that had stretched to eight straight sessions. Chip stocks had climbed through the year as market participants priced in anticipated demand from large-scale AI infrastructure expansion alongside projected supply constraints. Investor reassessment of spending trajectories in data centre build-out, alongside renewed attention to cost pressures, weighed on those equities.

Valuations across the chipmaker sector remained unsettled in the days following an announcement by CXMT, the Chinese memory manufacturer, that it had recorded advances in next-generation memory development. Investors who had anticipated that chipmakers based in the United States and South Korea would hold commanding positions in both market share and pricing found themselves unsettled by the development, with portfolio managers weighing whether lower-cost, more efficient chips produced in China could reshape that picture.

Thomas Martin, a portfolio manager at Globalt Investments, noted that markets tend to sell first and seek clarity afterward, which he described as the driver of the volatility. The semiconductors index has retreated more than 20% from a peak reached in June, though it still carries a gain of nearly 60% on the year.

Trading on the South Korean exchange proved unsteady throughout the week. Two chipmakers — SK Hynix and Samsung Electronics — together account for an outsized share of the Kospi index's overall composition. Over the course of the week, South Korea's Kospi index posted a 14.5% loss — a seven-day retreat not seen in severity since 2008.

By June of that year, the Kospi had climbed as far as 116% above its opening level for the calendar period, extending a run of gains that had built throughout the preceding months. Despite a 35% gain on the year, the index surrendered all the ground it had accumulated over the preceding six months.

Semiconductor chips, which power the infrastructure behind artificial intelligence, together represent close to a fifth of the total market capitalisation tracked by the S&P 500. Ongoing weakness in the sector carries the potential to weigh on broader market performance. On Friday, the VIX — the index tracking expected swings in equity markets — climbed past the 20-point threshold, a reading associated with heightened turbulence, after posting a 30% gain on the day.