The S&P 500 fell 0.7% as semiconductor stocks slid and Netflix disappointed investors with weak earnings guidance, extending a global selloff in technology shares driven by concerns over AI spending returns.
Netflix reported third-quarter revenue guidance of $12.86 billion and diluted earnings per share of 82 cents, both falling short of Wall Street expectations of $13 billion in revenue and 84 cents in earnings, according to Reuters and Barron’s.
Shares of Netflix fell nearly 8.6% in after-hours trading to $67.99, according to Reuters, with the stock down 21% for the year as of the prior close. The streaming giant’s weak outlook reflects growing concerns about its ability to sustain growth amid intensifying competition from traditional media companies and social platforms like TikTok and YouTube.
Chip stocks bore the brunt of selling pressure. Semiconductor giant TSMC lost 7.29%, while Intel fell 7% and Micron Technology declined 4.4% in overnight trading, according to sources cited by Fortune. The Nasdaq Composite declined 1.47% to 25,881.95, according to CNBC.
Multiple factors triggered the selloff. Fortune reported that earnings calls from chipmaker TSMC and Netflix both disappointed traders, prompting investors to reassess the AI chip sector’s near-term profitability. The semiconductor decline reflected broader investor skepticism about returns on massive AI infrastructure spending, with concerns that revenues from various AI models may not justify the capital expenditures hyperscalers have committed.
Apollo Global Management analyst Torsten Sløk warned that a mismatch between AI capex and free cash flow could threaten economic growth. “If the hyperscalers get their timing wrong, it would risk tipping the economy into recession,” he said, noting that AI has been the primary driver supporting both stock markets and the broader economy.
The global sell-off extended beyond U.S. markets. Japan’s Nikkei 225 fell 4.03%, while South Korea’s KOSPI dropped 6.37%, according to Fortune. The weakness reflected investor concerns about AI spending sustainability and questions about whether semiconductor valuations had become stretched after a strong first half of 2026.
Sources
- Reuters — Netflix Q3 guidance shortfall, share decline in after-hours trading
- Barron’s — Netflix earnings details, Q2 revenue miss, stock decline
- Yahoo Finance — S&P 500 and Netflix stock movements
- CNBC — Nasdaq Composite decline and chip stock weakness
- Fortune — TSMC and Netflix earnings triggers, global market movements, analyst commentary
