US stocks opened sharply lower Friday, with the Nasdaq Composite falling 1.8% as semiconductor stocks extended a selloff that has erased $3.3 trillion from global chip shares since late June. The S&P 500 dropped 1.19% and the Dow Jones Industrial Average declined 1.03%, with chipmakers across the board posting losses. The decline follows a Thursday session that saw the S&P 500 fall 0.5% as the AI-driven momentum trade hit its biggest wall since 2001.
US stocks opened sharply lower Friday, with the Nasdaq Composite falling 1.8% as semiconductor stocks extended a selloff that has erased $3.3 trillion from global chip shares since late June. The S&P 500 dropped 1.19% and the Dow Jones Industrial Average declined 1.03%, with chipmakers across the board posting losses. The decline follows a Thursday session that saw the S&P 500 fall 0.5% as the AI-driven momentum trade hit its biggest wall since 2001.
The Nasdaq Composite dropped 1.8% at the open Friday, extending a selloff in semiconductor stocks that has erased $3.3 trillion in market value since late June.
"The selloff reflects growing investor scrutiny on AI spending, with hyperscaler capex now the key question for the entire ecosystem," said Seema Shah, chief global strategist at Principal Asset Management.
The S&P 500 fell 1.19% and the Dow Jones Industrial Average declined 1.03%, with all three major indexes on track to extend weekly losses. Chipmakers bore the brunt: Taiwan Semiconductor Manufacturing Co. slid 4.49%, Lam Research Corp. lost 4.62% and ARM Holdings Plc fell 4.77%. Advanced Micro Devices Inc. declined 3.86%, Intel Corp. dropped 3.69% and Micron Technology Inc. fell 3.19%. Nvidia Corp., the bellwether of the AI trade, slipped 2.07%.
The selloff comes after the S&P 500 on Thursday posted its third drop in four sessions, closing at 7,533.77, as a powerful momentum trade that had driven the market higher saw its biggest unwind since 2001. Investors are now focused on upcoming earnings from hyperscale cloud operators, whose capital spending plans will determine whether the AI infrastructure build-out can justify the sector's valuation.
The decline in equities coincided with rising Treasury yields, with the 10-year yield edging higher as traders digested fresh data on retail sales and jobless claims. The selloff was global in scope, with South Korean chipmakers also whipping lower in Asian trading.
Adding to the pressure on semiconductor stocks, Chinese startup Moonshot this week unveiled Kimi K3, believed to be the world's largest publicly available AI model, highlighting the rapid progress of China's open AI ecosystem. Meanwhile, Bloomberg reported that Alphabet Inc. was behind schedule in delivering Gemini 3.5 Pro, its most powerful AI model, raising questions about the pace of AI development at major US technology companies.
This article is for informational purposes only and does not constitute investment advice.
