Global stocks fell on Friday as investors soured on technology stocks and worried about a new surge in energy prices.

AI companies have reported stellar profit growth in recent days, but they have also committed to spending hundreds of billions on building AI infrastructure, leading some investors to question whether they will ever see a return on their huge outlays.

Meanwhile, Iran has threatened to shut down a key Red Sea oil route if the United States attacks Iranian infrastructure, further disrupting global energy markets that have been hit by the closure of the Strait of Hormuz in recent months.

“The crisis of confidence over heady tech valuations has intensified with a sell-off sweeping markets,” Susannah Streeter, chief investment strategist at Wealth Club, said in a morning note.

“This nervousness is compounded by concerns about the escalating conflict in the Middle East as higher energy prices appear to take hold,” Streeter added.

Here’s where the key markets were at 6:00 a.m. ET on Friday:

• S&P 500 Futures: -0.9%
• Nasdaq 100 Futures: -1.8%
• Dow Jones Futures:-0.7%
• Germany DAX: -0.8%
• Euro Stoxx 50: -1.3%
• Hang Seng from Hong Kong: -1.8%
• Shanghai Composite: -3.1%
• West Texas Intermediate Crude: +2%
• Brent Crude: +1.8%

AJ Bell chief investment officer Russ Mold highlighted growing anxiety over memory chips and other AI infrastructure in a morning note.

“With sentiment fragile, investors are becoming increasingly cautious about valuations in the technology and artificial intelligence sector, especially in the memory chip space, where share prices have risen to unprecedented levels this year,” he said.

Asia’s chipmakers had seen a huge AI-driven rally this year, but some of the region’s biggest winners are falling as investors question lofty valuations and South Korea moves to curb speculative trading in one of this year’s hottest stock markets.

Nowhere is the change more striking than in Kioxia, Japan.

The memory chip maker was the second-best performing non-U.S. stock in the MSCI All Country World Investable Market index in the first half of the year, up 631%. Last month, it became Japan’s most valuable listed company.

That momentum has quickly crumbled.

Kioxia shares plunged 16% on Friday following an overnight sell-off in U.S.-listed memory stocks. The stock has halved from its June high, wiping about 30 trillion yen, or about $185 billion, from its market value.

Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, fell more than 5% despite reporting blockbuster second-quarter results on Thursday, with profits up 77% from a year earlier.

Streeter attributed the adverse market reaction to investors being “increasingly concerned about the magnitude of hyperscalers’ spending and the risks associated with deploying such vast sums in technology that is evolving at breakneck speed.”

The South Korean market was closed on Friday, but Samsung Electronics and SK Hynix have already fallen about a third from their highs this year. SK Hynix shares listed on Nasdaq closed 14% lower on Thursday.

The weakness followed South Korea’s decision to tighten rules on single-stock leveraged exchange-traded funds after weeks of wild swings in the market. Regulators said the measures were aimed at cooling excessive speculation.

South Korea had been one of the hottest stock markets in the world this year, with the rally fueled in part by strong retail participation and leveraged bets concentrated on AI-related names.

Top economist and former PIMCO CEO Mohamed El-Erian said South Korean authorities face a delicate balancing act: tackling inflation while avoiding excessive financial volatility that could trigger “disorderly deleveraging.”

“It is worth watching how this will develop in the coming weeks: it is not an easy combination to manage, and the latter, if managed poorly, could have some cross-border effects,” he wrote in X on Thursday.