Global Chip Sell-Off Drags Tech Markets Lower as AI Spending Doubts Mount

A broad-based sell-off in semiconductor stocks swept through global markets on Friday, pushing Nasdaq 100 futures down 1.9% and wiping billions in market value from chipmakers across Asia, Europe, and the United States, as investors grew increasingly skeptical about the sustainability of artificial intelligence infrastructure spending.

Dow Jones Industrial Average futures fell 335 points, or 0.6%, while S&P 500 futures lost 0.9%, underscoring the breadth of the pressure on equity markets heading into the final trading session of the week.

The damage was most pronounced in semiconductor shares. By 5:50 a.m. ET, the iShares Semiconductor ETF had fallen 3.7%, and the VanEck semiconductor ETF was down 3.4%. Applied Materials and LAM Research each shed roughly 5%, while Intel and KLA Corporation lost more than 4%. Arm and Micron were each down 4%, and Nvidia fell 3%.

Those moves extended losses from the prior session. The VanEck SMH semiconductor ETF was on pace for a weekly decline of 6.9% — its third down week in four — while the S&P 500 was off 0.6% for the week, the Dow had slipped 0.2%, and the Nasdaq had dropped 1.5%.

The rout spread far beyond U.S. borders. Japan's Nikkei 225 closed 4% lower, mainland China's CSI 300 fell 3.6%, and Australia's S&P/ASX 200 shed 0.5%. In Europe, Dutch semiconductor equipment maker ASML dropped 4.4% and peer ASMI fell 5.4%. STMicroelectronics lost 7%, Infineon declined 5.6%, and BE Semiconductor shares fell 5.3%.

Strategists at BBH attributed the move to a shift in investor sentiment, noting that investors are "increasingly questioning the sustainability of the ongoing AI capital expenditure boom." They cited a recent Bank for International Settlements annual economic report cautioning that "boom-bust cycles are a regular feature of past investment surges driven by transformative technologies."

Not all Wall Street voices shared that alarm. Barclays strategists said in a Friday note that while "tech volatility may persist in the near term," they believe "the reset in positioning should ultimately prove healthy, creating more attractive entry points for long-term investors targeting the structural AI theme."

Geopolitical tensions added to the unease. The U.S. Central Command said it had completed its sixth consecutive evening of strikes against Iran, hitting dozens of military targets including logistics infrastructure and maritime capabilities. Iranian officials said Friday they had targeted U.S. military forces in Syria and Bahrain, widening the conflict's geographic reach. The renewed hostilities have fractured a fragile truce reached the prior month, again disrupting energy flows through the Strait of Hormuz, which typically handles around 20% of the world's oil traffic.

Against that backdrop, gold managed a modest recovery, rising 0.6% at around 5 a.m. ET after several consecutive days of losses. The metal remains on track for a weekly loss of more than 3% and has fallen roughly a quarter from an all-time high reached in late January, pressured by a stronger dollar and a more hawkish Federal Reserve stance.

SpaceX shares added to the week's turbulence, falling 3.5% in premarket trading after the company aborted a Starship rocket test flight the previous evening due to an engine ignition failure. "Some of the engines didn't start, triggering an automatic launch abort," founder Elon Musk said in a post on X. "Now offloading propellant. Next launch attempt hopefully in a few days."

With AI capital expenditure scrutiny now visible across multiple asset classes and geopolitical flashpoints showing no sign of resolution, how quickly investor confidence in the semiconductor sector rebuilds will depend in part on whether major technology companies can demonstrate returns on their infrastructure outlays in forthcoming earnings reports.

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