Nasdaq 100 falls 3.5%, S&P 500 drops 1.8% as AI worries hit Wall Street

US markets closed lower on Friday as worries about AI hype returned, first reported by CNBC-TV18. Wall Street slumped over 1% after tech stocks fell. The Nasdaq 100 dropped 3.5% and briefly entered a technical correction. The S&P 500 fell 1.8% and ended below its 100-day moving average. Intel had its largest decline in over forty years.

Credit news added to the pressure. CNBC-TV18 and NDTV Profit reported that S&P Global Ratings took an early, preliminary step toward a possible Meta downgrade within two years. The reason given was AI spending. CNBC-TV18 also reported that Big Tech has spent $750 billion combined on AI this year.

Business Today, which first reported the point, featured Tiffany Wilding, economist at PIMCO, in its coverage. It said AI investment now takes a growing share of GDP, even as other private fixed investment has declined. That pattern is consistent with crowding out. The wider fear is that heavy AI spending absorbs capital and leaves less borrowing room for other businesses.

The sell-off coincided with talk that the US could resume military action against Iran. CNBC-TV18 also reported that Brent crude was above $115, that Apple became the most valuable company again, and that Binance disclosed a record hack.