Tech stocks fell again as fears of an AI bubble grew

Saturday 08 November 2025 11:16
| Updated:

Saturday 08 November 2025 11:20

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Technology shares fell again on Friday, extending a tough week for the sector as investors fretted over soaring valuations and a possible AI bubble.

Leading names like Nvidia, Palantir, Meta, AMD and Tesla all suffered losses, wiping out gains from earlier in the year and raising concerns about whether AI-driven growth can justify current market prices.

The sell-off comes amid renewed concerns about corporate debt and large-scale AI spending.

Oracle fell nearly two percent on Friday, taking its weekly loss to about nine percent, while AMD lost nearly nine percent for the week and Broadcom dropped more than five percent.

Leading AI companies have been hit hard after a series of disappointing investor sentiment and concerns regarding the sustainability of capital-intensive AI projects.

Concerns about the AI ​​bubble

Friday’s session follows an earlier spike in unease when OpenAI’s chief financial officer, Sarah Friar, stated that the company was exploring “an ecosystem of banks, private equity, maybe even government support” to fund the expansion of AI infrastructure.

The statement briefly sparked fears of a government-backed bailout, although its chief executive Sam Altman quickly clarified that OpenAI does not want government guarantees and believes taxpayers should not shoulder the losses of private companies.

“Market participants are not used to seeing companies heavily involved in AI selling like this,” said David Morrison, senior analyst at Trade Nation.

“It’s one thing to see stocks at the forefront of AI development slump without a clear catalyst.”

Other analysts also highlighted pressure from high valuations and debt levels in the technology sector.

Record off-balance sheet lending by Meta, $30 billion with private credit firm Blue Owl, and a $17.5 billion sale of US bonds by Alphabet, as well as a €6.5 billion issuance in Europe, have added to market unease about the pace of AI-related capital spending.

Tesla also faced pressure, falling 3.5 percent in early trading despite shareholders approving a potential $1 trillion pay package for Elon Musk, contingent on the company achieving a dramatic increase in market value over the next decade.

Investors appeared skeptical about the feasibility of the growth targets, suggesting broader unease in the sector.

But some market observers think the setback may only be temporary.

Leah Bennett, chief investment strategist at Concurrent Asset Management, said: “This AI selloff is part of a rotation, not a collapse. AI spending is still strong, and the rally is likely to continue, although valuations remain limited.”

Investor sentiment is also influenced by external economic uncertainty.

The ongoing US government shutdown, which limits access to official economic data, adds to market caution.

A lack of nonfarm payrolls figures for two straight months and a University of Michigan survey showing consumer sentiment near record lows have made it difficult for traders to gauge the broader economy, adding to concerns about exposure to the high-tech sector.

Despite these pressures, former FCA chairman Adair Turner said that fears of an AI-induced financial crisis may be overblown.

“All the major financial crises of the last 50 years were caused by credit,” Turner said. “We haven’t seen that with AI. The current sell-off is more due to valuation and sentiment, not systemic risk.”

The tech-heavy Nasdaq Composite ended slightly lower on Friday, but the broader story this week was mounting pressure on some of the highest-valued technology companies.

Seven so-called outperformers – Nvidia, Meta, Amazon, Apple, Microsoft, Tesla, and Alphabet – have experienced significant downside pressure, with Nvidia, AMD, and Palantir posting double-digit losses over the last five trading sessions.

As the week draws to a close, the technology sector faces a difficult balancing act as investors remain eager to support AI-based innovation but increasingly concerned about astronomical valuations and the rising cost of capital required to sustain growth.