Apple’s decision to raise prices on MacBooks and iPads by up to 20 per cent, citing soaring memory and storage chip costs, sent a shock through global equity markets on Friday and crystallised a week of heavy selling in artificial-intelligence stocks. The Nasdaq Composite fell 4.7 per cent for the week, its worst performance in months, while the Philadelphia Semiconductor Index lost 7.9 per cent. In Asia, South Korea’s Kospi index plunged 5.8 per cent, triggering a circuit breaker, and Japan’s Nikkei 225 dropped 4.2 per cent. European technology shares slid 1.6 per cent, dragging the Stoxx 600 lower.

The rout reflects a sharp reassessment of the AI investment thesis. For years, valuations of chipmakers and AI platform companies were buoyed by the promise of the technology, but investors are now scrutinising the enormous capital expenditure required to build data centres and secure high-performance chips, and the lack of immediate returns. The price hikes by Apple and Microsoft—which also raised Xbox costs—exposed how the AI buildout is creating cost pressures that are now being passed to consumers, raising fears of demand destruction and persistent inflation. This has produced a bifurcated market: chip manufacturers like Micron Technology benefit from surging demand and pricing power, while companies that rely on these components face margin compression.

A report that OpenAI may delay its initial public offering until 2027 further dampened sentiment, underscoring concerns that even the most prominent AI firms are wary of volatile market conditions. The rotation out of tech was evident across regions. In New York, defensive sectors such as healthcare and consumer staples gained, while chip stocks tumbled; the S&P 500 ended the week down 2.05 per cent. In Seoul, memory-chip giants Samsung Electronics and SK Hynix were among the hardest hit. Analysts in London and New York described the move as a necessary correction after months of concentrated positioning, rather than a panic, but warned that the easy gains in AI stocks may be over.

The focus now shifts to the corporate earnings season, which begins in a few weeks. Investors will seek evidence that AI-related spending is translating into revenue growth and that companies can sustain margins amid rising input costs. The Federal Reserve’s interest-rate trajectory remains a key variable, with any further tightening likely to pressure high-valuation technology stocks. The Russell index rebalancing added technical volatility, but the fundamental test lies in the upcoming profit reports.