Stay informed with free updates
Simply sign up to the US equities myFT Digest — delivered directly to your inbox.
US tech stocks fell on Friday, heading for their worst month in almost a year, as investors’ fears about the economic fallout from AI combined with US-Iran conflict worries.
The Nasdaq Composite fell 0.8 per cent in morning trading on Friday, taking its losses in February to nearly 3.5 per cent and putting the tech-heavy index on track to post its worst week since March 2025 when the index shed 8 per cent as US President Donald Trump’s tariff threats began to hit markets. The S&P 500 fell 0.6 per cent.
Stocks have been rocked this month by a series of scares over the potential for AI to disrupt entire industries, including software, insurance and wealth management.
The sell-off had been “driven by a bearish narrative that AI would eliminate most white-collar jobs and eventually lead the economy into collapse”, Bank of America analysts wrote.
They added that the narrative was “at odds with sound economic theory” but that “crowded positioning” in the stock market was exacerbating the size of the moves.
In addition, investor nerves about the possibility of a looming US military strike on Iran dented risky assets, contributing to the stock market falls as the oil price jumped. The international oil benchmark Brent crude climbed 2.8 per cent to trade at $72.70 a barrel on Friday.
Washington told non-emergency staff in Israel that they could leave the region on Friday, which analysts suggested had caused the rising oil price by adding to fears of a looming US-Iran war and broader regional conflict.
Trump has ordered the largest American military build-up in the region since the 2003 Iraq war and has threatened to launch strikes on Iran if the two countries do not reach a deal over Iran’s nuclear programme.
Tech stocks have also been hit this week by persistent concerns about the vast scale of corporate spending on AI infrastructure — and doubts over when it will pay off.
Earnings from chipmaking giant Nvidia earlier in the week showed stronger than expected revenues and blockbuster profits, but the report failed to enthuse broadly nervous investors. The chipmaker’s share price fell more than 2 per cent on Friday, adding to a 5.5 per cent drop on Thursday.
Rushabh Amin, a fund manager at Allspring Global Investments, said that “capex intensity is under scrutiny” and “earnings are no longer being rewarded as they were”, with investors looking for tech company spending to translate to profit margins before it could be rewarded.
Software stocks sold off on Friday as a brief rebound fizzled out, adding to recent pressure over fears that new AI technology will upend business models in the sector. Workday fell more than 6 per cent, taking its loss this year close to 40 per cent.
US private capital giants, which have extended loans to software companies and are also holders of their equity, continued to sell off too. A large credit fund managed by KKR on Thursday reported a jump in troubled loans and lower investment income, adding to investor fears about the health of private markets.
KKR, Ares and Apollo were all down more than 5 per cent on Friday and Blackstone fell 3.3 per cent.
US government bonds rallied as investors piled into safe assets. The yield on the 10-year Treasury fell 0.04 percentage points to 3.98 per cent, taking it below 4 per cent for the first time since November. Bond yields fall as prices rise.
“When the going gets tough and investors need liquidity and safety against risk, the asset that performs best is US Treasuries,” said Edward Al-Hussainy, a portfolio manager at Columbia Threadneedle.
Friday’s move extended broader gains in the Treasury market that have put government bonds on track for their best month in a year despite signs of persistent inflation.
The sweeping risk-off move lifting Treasuries had been driven by “private credit worries and AI job displacement fears across many industries”, said Nicolas Trindade, senior portfolio manager at BNP Paribas Asset Management.
Data on Friday showed a sharper than expected rise in producer prices, the latest evidence of growing price pressures in the US economy. Bureau of Labor Statistics data showed the producer price index for final demand increased 0.5 per cent in January, against projections of a 0.3 per cent rise. The core measure, which strips out changes in food and energy prices, was also expected to rise 0.3 per cent month on month, but instead increased 0.8 per cent.
Altaf Kassam, head of investment strategy and research for Europe at State Street Investment Management, said that the PPI print “was a confirmation of the market’s bad mood” because it “locks in rate uncertainty just when the market was becoming comfortable with easing inflation and a weakening but not collapsing jobs market”.