Wall Street was on track to close the week with losses on Friday as the sell-off of chipmakers and other AI-related shares again dragged markets lower.
Futures for the S&P 500 declined 0.8% while futures for the Dow Jones Industrial Average were down 0.5%. Nasdaq futures tumbled 1.6%.
Most computer chipmakers — including Micron, Nvidia, Broadcom and Qualcomm — were down between 2% and 3% in premarket trading. Intel slid 3.4%.
Stocks related to artificial intelligence have been under pressure for weeks because of worries that their prices have shot too high and that voracious demand for computer memory and processors may not be sustainable if AI ends up not producing as much profit and productivity as promised.
“Now investors are taking profits from the first-half winners and moving toward areas that were left behind,” Stephen Innes, of SPI Asset Management, said in a commentary.
The announcement of a new Chinese open-sourced AI model by startup Moonshot, Kimi K3, further shook up markets. Similar to when China's DeepSeek announced its AI model in early 2025, another low-cost rival to big Western AI models like ChatGPT and OpenAI could potentially hurt demand for computer chips and other components that have greatly benefited from rapid adoption of AI.
SpaceX, Elon Musk's rocket company which also owns xAI, was down 4.5% after it aborted the launch of its mega Starship rocket. Starship came within a second or so from blasting off on a test flight Thursday, but some of the engines failed to ignite, triggering a launch abort amid billowing clouds of smoke and vapor.
Netflix slumped more than 11% overnight after the video streaming company’s forecast for the current quarter fell below Wall Street’s expectations. The California company on Thursday reported better second-quarter profit than expected, but revenue fell short of analyst targets.
In Asia, South Korean markets were closed, but shares in Taiwan fell 6.5% a day after its TSMC, the world's biggest contract manufacturer of computer chips, announced it plans to spend an extra $100 billion on building fabrication plants in the U.S.
TSMC dropped 7.3% on Friday.
Tokyo's Nikkei lost 4% to 64,141.12, at times trading near its lowest level in over a month, as shares in memory maker Kioxia slumped 16.1%.
Computer chip equipment maker Tokyo Electron sank 8.2%. Chip testing equipment maker Advantest tumbled 7.2%.
SoftBank Group, which has invested tens of billions of dollars in AI-related businesses, shed 9%.
The Hang Seng in Hong Kong gave up 2% to 24,505.38, while the Shanghai Composite index lost 3.1% to 3,764.15, dipping to its lowest level in nearly 11 months.
Hong Kong-trade shares in Knowledge Atlas Technology Joint Stock Co., Ltd., branded internationally as Z.ai and previously known as ZhipuAI, tanked 28.5%.
In Australia, the S&P/ASX 200 declined 0.5% to 8,796.70.
At midday in Europe, Germany’s DAX dropped 0.5%, the CAC 40 in Paris fell 0.7% and Britain’s FTSE 100 was unchanged.
The United States expanded its airstrike campaign against Iran early Friday by hitting more bridges and collapsing a tower at a key Iranian port, part of U.S. President Donald Trump's threats to start striking infrastructure to pressure Tehran to ease its chokehold on the Strait of Hormuz.
Oil prices are near their highest level in a month because of worries that the war with Iran will keep oil tankers out of the Strait of Hormuz and block shipments of crude from the Persian Gulf to customers worldwide.
The price for a barrel of Brent crude, the international standard, $1.72, or 2%, to $85.95 per barrel. U.S. benchmark crude oil was up 2.3%, or $1.93, to $80.88 per barrel.