The stock market today closed lower as semiconductor stocks slid, with the S&P 500 falling 1% to 7,457.69 on Friday. The Nasdaq Composite dropped 1.4% while the Dow Jones Industrial Average declined 0.7%, capping a turbulent week as investors reassessed the sustainability of massive artificial intelligence spending.
Chip stocks led the market decline, with the PHLX Semiconductor Index falling 4.3% and entering a bear market, according to the Wall Street Journal. Memory-chip makers including Sandisk, Seagate, Micron, Intel, and AMD all posted losses despite record earnings from Taiwan Semiconductor Manufacturing Company, which reported profit jumping 77% in its fifth consecutive quarter of record results.
The broader pullback in semiconductor stocks reflected investor concerns about whether hyperscalers’ aggressive artificial intelligence capital expenditures remain sustainable. According to Forbes, the root cause of the decline is fear that hyperscalers’ 67% jump in AI capital expenditures to $650 billion may be unsustainable. Goldman Sachs’s prime brokerage unit reported that hedge funds’ aggregate net exposure to its broad AI basket had fallen to its lowest level this year, suggesting large investors are locking in profits after an explosive run, the Journal reported.
Adding pressure Friday, Chinese AI startup Moonshot unveiled Kimi K3, described as the world’s largest open AI model, rivaling Anthropic’s frontier models. The release sparked fresh concerns about competition in the AI space and the returns on massive infrastructure investments.
Broader earnings also weighed on sentiment. Netflix stock declined 7% after the streaming company’s third-quarter revenue forecast disappointed the Street. The company cited a “dynamic and competitive” entertainment landscape as it battles for subscribers.
For the week, the S&P 500 dropped more than 1.5% while the Nasdaq declined 2.9% and the Dow lost nearly 1%, marking a sharp reversal from the market’s tech-driven rally that began in March.
Sources
- Wall Street Journal — S&P 500 and Nasdaq closing figures, PHLX Semiconductor Index decline, Goldman Sachs hedge fund exposure data, TSMC earnings
- Yahoo Finance — S&P 500 closing price and percentage decline, Nasdaq Composite and Dow Jones figures, semiconductor sector bear market status, weekly performance, Moonshot AI model announcement, Netflix stock decline
- Forbes — Hyperscaler AI capital expenditure figures and sustainability concerns
- CNBC — S&P 500 closing data and market overview
- MarketWatch — Market closing figures and daily decline data
