Wall Street experienced a volatile week as investors grappled with the implications of artificial intelligence (AI) spending and shifting market trends. Micron Technology's strong earnings report on Wednesday reignited confidence in the AI trade, while broader market indices saw mixed performance. The tech-heavy Nasdaq Composite fell 4.6% for the week, the S&P 500 slipped 1.95%, and the Dow Jones Industrial Average edged up 0.6%, benefiting from lower oil prices and a rotation away from AI stocks.
Micron's blockbuster quarter more than quadrupled its revenue from a year ago, with guidance exceeding Wall Street expectations. The company also announced 16 long-term supply agreements, boosting investor confidence in the memory chip upcycle. Shares surged 16% on Thursday, lifting peers like SanDisk, Western Digital, Applied Materials, and Lam Research. However, earlier in the week, semiconductor stocks faced pressure after a sell-off in South Korea's Kospi Index, which dragged down AI-related stocks and fueled concerns about the sector's rapid expansion.
Concerns over AI spending intensified as major tech firms—including Amazon, Microsoft, Alphabet, and Meta—are projected to spend $700 billion on semiconductors and AI infrastructure this year. SpaceX, owned by Elon Musk, also plans significant AI investments, though its shares tumbled 18% this week, temporarily removing Musk from the trillionaire ranks. Bank of America warned of worsening inflation, suggesting three interest rate hikes may be needed, adding to market uncertainty.
Market volatility persisted, with early-week declines in US tech stocks partially reversing before selling resumed. Analysts noted that while AI demand remains strong, the sector's high spending raises questions about sustainability. Healthcare and economically sensitive stocks gained as investors rotated away from tech.