Wall Street opened lower on Friday as selling pressure intensified in the technology sector, driven by growing investor skepticism over the sustainability of artificial intelligence valuations.
The decline marks a continuation of the negative sentiment that has plagued US equities since Tuesday, when broad-based selling spread from American markets to Asian and European trading sessions.
The core of the current repricing centers on the capital intensity of the AI boom.
Market participants are increasingly concerned about the future profitability of the massive expenditures being undertaken by major technology firms.
Rather than funding these investments through operating cash flow, many of these companies are turning to debt markets, raising questions about leverage and long-term returns on investment.
This shift in sentiment has exacerbated the underperformance of the Nasdaq Composite relative to the broader S&P 500.