Tech giants face AI bubble fears as stocks tumble

Large technology companies are pouring billions into artificial‑intelligence projects, financing the effort with debt as interest rates rise. Analysts warn that a pop of an AI bubble could have far‑reaching effects, noting that the five biggest Wall Street tech firms together hold a market value comparable to China’s entire economy.

The Nasdaq has slipped more than 6 % from its June peak, driven by a broad sell‑off in AI‑linked stocks. Shares of Microsoft, Meta, Apple, Nvidia, Tesla and Oracle have each fallen about 10 % or more from recent highs. Semiconductor demand for AI chips has pushed memory‑chip prices to record levels, benefitting chip makers while weighing on the tech firms that buy them. OpenAI has considered postponing its IPO, and SpaceX announced a $25 billion bond issuance, further unsettling investors.

The market turbulence is compounded by tighter monetary policy from the U.S. Federal Reserve, which could increase borrowing costs for heavily leveraged tech firms. While some view the dip as a short‑term correction, many warn that a severe correction could ripple through the broader economy.