European shares stumble at end of best month since June on AI worries

European shares fell on Friday, dragged down by a global tech decline that cut billions from the market worth of significant chip manufacturers, marking the end of a generally robust month. The pan-European STOXX 600 index slipped 0.36% to 646.75 points, even though it had its best monthly performance since June. This downturn came after strong earnings from US companies Amazon and Intel reignited apprehensions about the exorbitant expenses of establishing AI infrastructure, prompting a retreat from technology stocks globally.

Analyst Daniela Hathorn from Capital.com noted that while strong AI demand remains a positive, it's no longer sufficient by itself. The European tech index plummeted 2.75% for its worst day since July 7, contributing to sectoral losses. Shares of AT&S, Soitec, and Technoprobe fell between 9% and 13% on the STOXX 600 index. Despite solid earnings in Europe this quarter, the market is struggling to reconcile the high capital expenditure on AI infrastructure with the uncertain timeline for returns.