Stocks tumble, head for losing week, led by chipmakers; Netflix plunges

Stocks fell on Friday as mounting jitters over artificial intelligence spending dragged tech lower, putting the major averages on pace for a losing week.

The Nasdaq Composite dropped 2.3% as tech stocks came under scrutiny. The Dow Jones Industrial Average slipped 169 points, or 0.3%, while the S&P 500 lost 1.2%.

The iShares Semiconductor ETF (SOXX) and the VanEck Semiconductor ETF (SMH) were both down more than 5%. Shares of Applied Materials and LAM Research declined around 5%, while Intel, KLA Corporation and Arm were around 4% lower. Micron lost more than 2%, and Nvidia lost more than 3%.

Those losses added to declines seen in the previous session, which were also led by semiconductors. Adding to that downbeat sentiment, Chinese startup Moonshot AI unveiled a new model that it says narrows the gap with the top offerings in the U.S.

The SMH is down 10% for the week, on pace for its third weekly decline in four weeks. The major stock benchmarks are also down week to date, with the S&P 500 off by nearly 2%, while the Dow and Nasdaq have slipped more than 1% and more than 3%, respectively.

In a note on Friday morning, strategists at BBH said investors are “increasingly questioning the sustainability of the ongoing AI capital expenditure boom.”

“The [Bank for International Settlements] annual economic report cautions that boom-bust cycles are a regular feature of past investment surges driven by transformative technologies,” they said.

Meanwhile, Barclays strategists appeared unperturbed by the tech volatility in a Friday note.