Markets Shaken: Stocks & Crypto Tumble as AI Bubble Fears Intensify

Fear hit the tape this week. A sharp sell-off gripped both traditional and digital asset markets, with whispers of an overinflated AI sector turning into a roar.

The Tech Rout Spreads

What began as a correction in high-flying tech stocks didn't stay contained. The contagion spread rapidly to cryptocurrency portfolios. The narrative shifted from boundless growth to brutal reality checks—investors are suddenly questioning if the AI gold rush has peaked.

Digital Assets Feel the Heat

Cryptocurrencies, often touted as a non-correlated asset, proved no haven. Major tokens followed equities lower, erasing recent gains and testing key support levels. The downturn exposed a market still deeply tied to broader risk sentiment, despite its decentralized aspirations.

A Reality Check for Narratives

The sell-off serves as a stark reminder: no sector is immune to gravity. While the long-term potential of transformative technologies remains, markets have a habit of running ahead of actual utility. It's the classic cycle—hype builds castles in the sky, and fundamentals eventually send in the wrecking ball. After all, on Wall Street, a 'paradigm shift' is often just a fancy term for the next bubble.

This volatility isn't an endpoint—it's a feature. For disciplined investors, these shakes separate durable innovation from mere speculation, clearing the path for what's built to last.

TLDR

• S&P 500 and Nasdaq ended the week lower on Friday, wiping out previous weekly gains as tech stocks sold off broadly
• Broadcom shares dropped 11% despite record sales after analysts raised concerns about the company’s $73 billion backlog orders
• Bitcoin fell below $90,000, declining 2% during U.S. trading hours as AI-related worries spread to crypto markets
• Oracle denied Bloomberg reports of data center delays for OpenAI but still closed down 4.5% on Friday
• Chicago Fed President Austan Goolsbee said he expects more interest rate cuts in 2026 than the current median projection

The stock market ended Friday on a down note as investors pulled back from artificial intelligence-related investments. The S&P 500 fell 1.1% while the Nasdaq Composite dropped 1.7%. The Dow Jones Industrial Average declined 0.5%, losing 246 points.

Both the S&P 500 and Nasdaq ended the week lower. This reversed two consecutive weeks of gains for both indexes.

Broadcom led the decline among tech stocks. The custom AI chip Maker fell 11% on Friday despite posting record sales for its latest quarter. Analysts expressed concerns about specific details in the earnings report.

The company’s backlog orders totaled $73 billion. This figure raised questions among market watchers about future demand and execution.

Oracle added to the sector’s troubles after a Bloomberg report suggested delays in data center projects for OpenAI. The company denied any delays in a statement to Barron’s. Oracle shares still closed down 4.5% on Friday.

Ryan Jungk from Newfleet Asset Management explained the market’s hesitation. “The nature of this [AI] buildout is that we don’t have all that much certainty as to the speed, cost, and payback,” he told Barron’s.

Bitcoin Drops Below $90,000 Mark

Bitcoin fell below $90,000 during Friday trading. The cryptocurrency dropped 2% following the U.S. stock market open, reaching $89,800. Bitcoin had been trading around $92,500 overnight before the decline.

Crypto-related stocks followed the broader market lower. Robinhood and Strategy both fell nearly 2%. Stablecoin issuer Circle dropped more than 5%. Coinbase showed a slight decline.

Bitcoin mining stocks also experienced losses. Hut 8 fell more than 5% while Iren and Riot dropped about 4%. Cipher and Iren both declined around 2% over the past day.

The week showed a pattern of Bitcoin setting intraday lows during U.S. trading hours. This trend has led to the filing of a proposed AfterDark Hours ETF.

Consumer staples, healthcare, and materials performed better than tech on Friday. Each of these S&P 500 sectors gained less than 1%. These defensive sectors provided some stability during the tech selloff.

The Federal Reserve’s recent comments continued to influence market sentiment. Fed Chair Jerome Powell hinted at a possible rate cut pause in January during his Wednesday speech. Markets now expect only two rate cuts in 2026 instead of three.

Chicago Fed President Austan Goolsbee offered a different view. He opposed a December rate cut but said he expects more cuts in 2026 than the current median projection. Several other Federal Reserve members were scheduled to speak on Friday following the end of the blackout period.

Next week brings important economic data releases. The nonfarm payrolls and retail sales reports will both come out on Tuesday. The November consumer price index report is scheduled for Thursday release.