AI Stocks Sink as High Bond Yields Cast Shadow Over Wall Street

Wall Street's recent losses are being driven by AI stocks, which have been sinking due to concerns that their prices may have shot too high in the AI frenzy. The S&P 500 fell 0.5 percent and is on track for a third straight modest loss since setting its all-time high on Thursday.

The Dow Jones Industrial Average was down 56 points, or 0.1 percent, as of 12:25 pm Eastern time, while the Nasdaq composite was 1.1 percent lower. Leading the way lower were stocks like Micron Technology, which dropped 7 percent, and chip companies Nvidia, which fell 2.4 percent.

The recent swings in AI stocks have been attributed to worries about the strong demand for memory, processors, and other building blocks of data centers potentially fizzling out if AI proves less profitable than promised. The bond market has also had a significant impact on Wall Street, with yields remaining high due to concerns about inflation and interest rates.

High yields have made investors more cautious, leading them to be less willing to pay high prices for stocks, particularly those seen as the most expensive. This has put pressure on Big Tech companies that rely heavily on data centers to borrow money to fund their growth.