US tech stocks fall amid valuation concerns and higher interest rates

Technology Stocks Suffer Massive Losses as AI Boom Financing Doubts Wipe Out Billions

While the Dow Jones Industrial Average fell slightly by 0.35 percent to 51,670.10 points in morning trading, broader indexes suffered sharp declines. The S&P 500 lost 0.6 percent to 7,672 points, and the technology-heavy Nasdaq tumbled 1.4 percent to 26,309 points.

Semiconductor Index Nears Two Trillion in Losses Amid Rate Hike Fears

Investors increasingly scrutinized elevated valuations across the sector while grappling with the prospect of higher interest rates that drive up corporate borrowing costs. Reinforcing these headwinds, chip manufacturer TSMC issued conservative guidance for 2027 due to ongoing macroeconomic uncertainties. As capital gets more expensive, companies relying on heavy debt face severe pressure to prove their profitability.

Axel Rudolph, an analyst at IG Group, stated that the market would gradually recognize the distinction between AI demand and a profitable business model, noting that rising capital costs might not sufficiently protect the most heavily indebted players.

The confidence crisis struck digital infrastructure providers with high debt levels directly. Shares of the AI cloud firm CoreWeave fell for a second straight day, dropping four percent after plunging 15.5 percent in the prior session, according to onvista.de. CoreWeave competes in a crowded market dominated by well-capitalized hyperscalers including Amazon, Alphabet, and Microsoft. Additional reporting by dpa-AFX noted that New York Fed John Williams stated higher interest rates remain appropriate for the remainder of the year to combat persistent inflation, though he does not anticipate further hikes in 2027.

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