Dow Falls 486 Points as Chip Stocks Drop on AI Concerns

The Dow Jones Industrial Average fell 486 points on Friday in New York trading, a decline of about 0.9%, as investors moved away from semiconductor and technology stocks linked to artificial intelligence.

The S&P 500 declined 1.1% and the Nasdaq Composite dropped 1.7%. Nvidia slid roughly 3.4%, while Applied Materials and Lam Research each fell more than 5%. Intel, KLA, Arm and Micron also traded lower. The iShares Semiconductor ETF (SOXX) and the VanEck Semiconductor ETF (SMH) each declined more than 3%.

The Philadelphia Semiconductor Index remained under pressure after touching a two-month low on Thursday and is more than 19% below its late-June record high, placing the sector on track for its worst weekly performance since March 2025.

Investors questioned whether the pace of AI-related capital spending that drove months of gains can be sustained, contributing to renewed selling in chip names.

Company results offered a mixed picture. Taiwan Semiconductor Manufacturing Co. reported strong quarterly results and ASML provided upbeat guidance, but those reports did not reverse the sectorwide weakness. Semiconductor shares also weakened across Asia-Pacific and European markets.

Chinese startup Moonshot AI unveiled a new model its developers described as narrowing the gap with leading U.S. offerings, adding to competitive concerns.

Technology names outside semiconductors also fell. Netflix forecast third-quarter revenue and earnings below expectations and its shares dropped more than 11% despite second-quarter results broadly in line with estimates. Surgical robotics maker Intuitive Surgical declined about 11% after reiterating its da Vinci procedure growth forecast and warning that insurance-plan changes may be delaying some patient care.

Geopolitical developments added market attention. The U.S. military completed a sixth consecutive night of strikes targeting Iranian military infrastructure, logistics and maritime assets. Iran reported strikes on U.S. forces in Syria and Bahrain, and Kuwait reported an Iranian attack struck a power and water desalination plant. Those events disrupted flows through the Strait of Hormuz.

Oil prices rose, with U.S. West Texas Intermediate trading above $81 a barrel and Brent crude above $86. The CBOE Volatility Index climbed to its highest level in more than a week.

Traders awaited the University of Michigan consumer sentiment survey and U.S. industrial production data later in the day. Earlier in the week, several major U.S. banks reported strong earnings and recent inflation readings were softer than expected.