The US stock market sell-off continued on Friday, with technology and artificial intelligence-related shares leading the decline.
The S&P 500 fell 1.3%, while the tech-heavy Nasdaq dropped 2.2%, extending its 1.6% fall from the previous session.
Chip stocks were among the hardest hit as investors continued to pull back from AI-linked names. Arm fell 7%, Broadcom dropped 4.2%, and Advanced Micro Devices slid 7.8%.
The weakness adds to growing concerns that valuations across parts of the AI and semiconductor trade may have run too far, too quickly.
The sell-off followed steep falls in Asia, where Japan’s Nikkei 225 sank 4%, and Taiwan’s Taiex fell 6.5%.
Taiwanese chip giant TSMC dropped 7.3% despite reporting a record second-quarter profit, as investors focused on higher-than-expected spending plans.
The decline comes after a strong rally earlier in the year, fuelled by surging demand for AI infrastructure and semiconductor capacity.
Jim Reid, an analyst at Deutsche Bank, said global equities were continuing to slump as fresh doubts over the AI trade drove a pronounced sell-off in tech stocks.
Neuberger Berman portfolio manager Kei Okamura described the move as a “bloodbath”, saying the weakness was broad-based.
Investor nerves were also rattled by developments in China, where AI start-up Moonshot unveiled a new large language model, Kimi K3, which it said was the world’s largest open AI model by parameter count.
Analysts said Chinese models are gaining traction because they can be deployed at significantly lower cost than leading US systems.
The weakness comes as major US technology companies prepare to report second-quarter results, increasing scrutiny on whether earnings can justify elevated AI-linked valuations.
Markets were also pressured by renewed hostilities in the Middle East, which have pushed oil prices more than 15% higher this month to above US$85 a barrel.
