US stocks came under renewed pressure on Friday as investors extended a sharp selloff in AI linked shares, while fears over potential competition from SpaceX dragged telecom stocks lower, according to Reuters.

The Dow Jones Industrial Average fell 747.49 points, or 1.41%, to 52,332.44. The S&P 500 lost 0.38% to 7,634.09, while the Nasdaq Composite slipped 0.08% to 25,986.76.

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AI selloff weighs on Wall Street

The S&P 500 and Nasdaq touched their lowest levels in five weeks as concerns over the cost and financing of AI investments continued to unsettle investors.

AI related shares have swung sharply this month, initially coming under pressure over CoreWeave's debt burden and the cost of financing AI investment. A rally on Wednesday after upbeat results from SpaceX and Super Micro was reversed on Thursday, when the Nasdaq fell nearly 3%.

The selling intensified after Meta dropped nearly 8% following its report of its first cash outflow in more than a decade, amid concerns over its AI related spending. On Friday, Meta fell another 1.3%, while CoreWeave gained 0.3%.

"This is the short term where the selloff is extreme, and I don't think there are fundamental reasons for it," Kim Forrest, chief investment officer at Bokeh Capital Partners, told Reuters.

"We're at the beginning of a long cycle of AI and people thought it was going to be much shorter."

SpaceX fears hammer telecom stocks

Telecom shares also weighed on the market after a report said SpaceX was in talks with cellular infrastructure companies about launching a nationwide wireless carrier programme.

AT&T, Verizon and T Mobile fell between 3% and 4.7%, pulling the S&P 500 communication services index down 1%.

Tower operators moved in the opposite direction, with Crown Castle rising 12.6% and American Tower gaining 6.9%.

Energy stocks provided some support, with the S&P 500 energy index hitting a record high as oil prices climbed. Brent crude remained near a more than five month high amid Middle East supply concerns, adding to inflation worries ahead of next week's Federal Reserve meeting.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)