US tech stocks head for worst month in almost a year over AI jitters

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 1.1 per cent shortly after the market opened on Friday, taking its losses in February to around 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 rock markets. The S&P 500 fell 0.8 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 more than 3 per cent to trade at $72.90 a barrel on Friday.

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 2.3 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.

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 has 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. In response to the PPI data, traders in the futures market pulled forward bets on US interest rate cuts this year, with the first quarter-point reduction now not priced in until September. Before the data, traders were betting on July.