Global Tech Impacts Europe
European Shares Slip as Global Tech Weakness and AI Demand Concerns Drive Down STOXX 600
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European shares fell on Friday morning as a global tech selloff dragged markets lower, snapping a record-breaking run. The pan-European STOXX 600 index dropped 0.46% to 637.27, pulling back from a record close of 640.21 the day before, according to Reuters.
Two forces hit markets at once: rising fears over surging memory chip costs tied to AI demand, and a surprise regulatory probe into German fashion giant Zalando. Zalando shares fell as much as 9% in early trading after Germany's financial watchdog BaFin announced a formal investigation into the company's 2025 accounts, Reuters reported.
BaFin Probe Sends Zalando Shares Into Freefall
Germany's Federal Financial Supervisory Authority, known as BaFin, went public Friday with a probe it secretly began on June 19. Regulators say they found "concrete indications" of potential accounting violations in Zalando's 2025 financial report. The concern centers on the company's acquisition of About You Holding SE and whether Zalando improperly left related-party transactions out of its notes, according to Investing.com.
Zalando shares fell between 7.7% and 9% to around €24.55 by mid-morning. The probe adds to a rough stretch for the company. In 2025, Zalando lost a court challenge over its designation as a "Very Large Online Platform" under the EU's Digital Services Act. Poland also fined the company €9 million for using deceptive design tricks on its website, Reuters reported.
AI Chip Costs Spark "Chipflation" Fear Across Tech Sector
The broader tech selloff traces back to Wednesday, when Micron Technology reported a nearly 1,400% jump in quarterly profits — a sign of insatiable AI-driven demand for memory chips. But strong demand has a dark side: chip prices are surging faster than manufacturers can keep up, NPR reported.
Morgan Stanley analysts coined the term "chipflation" to describe how AI infrastructure costs are bleeding into the wider economy. Apple and Microsoft announced hardware price hikes of up to 20% on June 25, citing "unavoidable" memory chip costs. Apple CEO Tim Cook called the surge a "hundred-year flood," saying he had "never seen anything like it in over 40 years," according to Reuters.
European Chip Firms Among the Hardest Hit
The selloff hit European semiconductor stocks especially hard. STMicroelectronics fell 3.2%, Infineon dropped 2.9%, and ASML slid 1.2% by Friday morning, per Reuters. Analysts at UBS warned that tech firms are relying on "debt-backed spending" and could face serious trouble if AI investment does not pay off quickly.
Danni Hewson of AJ Bell said investor mood had shifted sharply. "FOMO was replaced with a fear of being burnt," she noted, as traders realized that sky-high valuations need earnings to keep growing fast. Despite Friday's drop, the STOXX 600 remains on track for a weekly gain, Investing.com reported.
Consumers Set to Pay More as AI Inflation Spreads
The chip cost surge is already hitting everyday prices. The MacBook Air base price rose from $1,099 to $1,299. The iPad Air jumped 25%, from $599 to $749. Analysts at Counterpoint Research predict the upcoming iPhone 18 could cost $150 to $200 more than its predecessor, Reuters reported.
Fixed-income markets are now pricing in a 40% to 50% chance the US Federal Reserve raises interest rates as early as July 2026 to fight chipflation-driven inflation, according to Investing.com. For now, investors are watching closely to see whether AI spending delivers real returns — or becomes a costly debt trap.
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