Chip Stocks Slide Into Bear Market in AI Unwind: Markets Wrap
(Bloomberg) — A selloff in chipmakers gathered pace, driving the high-profile group of stocks to a bear market on worries that the artificial-intelligence spending spree is becoming harder to justify.
The cohort of semiconductor powerhouses saw its worst week since April 2025, with a key industry gauge sinking 20% from a record. A surprise breakthrough from Chinese AI startup Moonshot jolted the sector, which also joined broader equity losses on geopolitical tensions. The Nasdaq 100 lost 1.5%. Oil jumped as the US and Iran traded attacks again.
“Those who were hoping for a placid summer Friday were in for a rude surprise,” said Steve Sosnick at Interactive Brokers. “The ostensible reasons were renewed Persian Gulf jitters that pushed oil prices higher, while reports that a new, inexpensive Chinese AI model rekindled DeepSeek-like concerns about that industry’s economics.”
Insatiable demand for all things related to AI had recently sent chip shares to their best-ever quarter. But volatility has resurfaced amid concerns about increased competition, possible overcapacity and whether big investments in the technology will pay off.
While earnings and demand trends remain strong, profit-taking suggests some investors are questioning how long the current pace of growth can continue, said David Morrison at Trade Nation.
“The question now is whether this will become yet another ‘buy the dip’ opportunity, or if the pace of selling accelerates as everyone rushes to the exit doors at the same time,” he added.
AI-related stocks have become more volatile as investors question both the pace and payoff of investments, but corporate earnings have not yet shown any slowdown in demand, according to Angelo Kourkafas at Edward Jones.
“The AI theme is likely maturing rather than breaking, which is a healthy part of how transformative investment cycles evolve,” he said. “Investors should maintain exposure to the AI theme, but complement it with more diversified and differentiated sources of return, including cyclical sectors, value-style investments, and international stocks.”
Sharp stock rotations are necessary for the equity rally to broaden beyond the tech sector, according to Citigroup Inc.’s Beata Manthey.
“The market has started to hope for some long-awaited broadening,” Manthey told Bloomberg Television. “For that to happen, you need to have some rotations, and rotations tend to happen in quite a violent way sometimes.”
Corporate Highlights:
Meta Platforms Inc. is in early discussions to lease computing power from its data centers to Anthropic PBC, according to people familiar with the matter. Apple Inc. and the US Justice Department are in early discussions about settling a 2024 lawsuit that alleges the iPhone maker violated antitrust laws. SpaceX is in talks to sell computing power to the US Department of Defense, the Wall Street Journal reported on Friday. Netflix Inc. sank after forecasting a second straight quarter of slowing sales growth, contributing to investor anxiety about the streaming giant’s future. Alcoa Corp. cut its production forecast for alumina after operational problems at an Australian refinery weighed on output, overshadowing a quarter in which higher aluminum prices helped lift its revenue. Some of the main moves in markets:
Stocks
The S&P 500 fell 1% as of 4 p.m. New York time The Nasdaq 100 fell 1.5% The Dow Jones Industrial Average fell 0.8% The MSCI World Index fell 1% Philadelphia Stock Exchange Semiconductor Index fell 1.6% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1440 The British pound fell 0.2% to $1.3457 The Japanese yen was little changed at 162.41 per dollar Cryptocurrencies
Bitcoin fell 0.1% to $63,997.05 Ether fell 1.8% to $1,837.21 Bonds
The yield on 10-year Treasuries was little changed at 4.55% Germany’s 10-year yield was little changed at 3.13% Britain’s 10-year yield declined one basis point to 4.95% Commodities
West Texas Intermediate crude rose 4.3% to $82.34 a barrel Spot gold rose 0.9% to $4,013.25 an ounce ©2026 Bloomberg L.P.
