Tech stocks shed more than $1 trillion in value Friday as oil surged to its highest levels in five months. The Nasdaq 100 sold off 2.5% and now sits about 7% below the all-time high it had set just last week, while the S&P 500 dropped 1% and the Russell 2000 fell 1.6%.

The Philadelphia semiconductor index fell 3.8%, marking its eighth straight day of losses — the longest such streak since 2008.

Brent crude surpassed $110 per barrel shortly after 2:30 p.m. ET Friday, its highest level since May, closing the week at $109.86 — its highest closing level since May 19.

U.S. crude jumped 3.5% to close at $101.41 per barrel, crossing the $100 mark for the first time since September.

According to TradingView, November WTI surged more than 3% to a one-month high on a weaker dollar and concerns that escalating Middle East hostilities could disrupt regional energy supplies. Diesel futures rose more than 1%, and diesel has climbed even faster than gasoline in recent months.

The sharp drop came as worries about ballooning debt, high interest rates and rising oil prices resurfaced. Fresh cracks appeared this week in the AI business model, as investors questioned when their massive cash injections into AI companies will pay off.

According to TradingView, swaps priced in more than a 50% chance that CoreWeave will default on its debt within five years, sending the stock down over 11%. Nebius fell more than 12%.

Many of these firms borrowed billions at high rates to expand at breakneck pace, and a day before the sell-off, analyst Ed Yardeni cut his year-end S&P 500 target to 7,900 from 8,400 over caution about the AI trade.

The energy shock raises the likelihood the Federal Reserve hikes rates again this year; it already boosted rates 0.25% in September to tame inflation.

Markets are discounting a 17% chance of a 25-basis-point hike at the October 27-28 FOMC meeting, per TradingView, and the 10-year Treasury yield rose to about 5.09%.

The pain spread beyond chips: cybersecurity and cloud infrastructure names slumped, while energy producers like APA Corp and Diamondback Energy, defense contractors including Northrop Grumman, and food producers rallied.

Wells Fargo analyst Mason Mendez warns that rebuilding depleted global inventories into 2027 could keep energy prices elevated for longer.