BUSINESS
Wall Street slides as AI rally worries deepen
Ragini Mathur and Avinash P
Reuters
Updated July 17, 2026, 1:27 p.m. ET
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The S&P 500 and Nasdaq hit multi-week lows on Friday as investors reassessed this year’s AI-fueled rally, triggering volatility in chip stocks, while a new AI model from China further soured sentiment
After a blistering run that lifted main stock indexes to record highs, investors have started to retreat from crowded semiconductor trades over worries about the scale of AI-related spending
Some of the chip stocks extended the previous session’s losses, with heavyweight Nvidia NVDA.O down 1.3%
The decline, combined with an early gain in Apple AAPL.O, pushed the iPhone maker ahead of Nvidia to briefly become the world’s most valuable company
The Philadelphia SE Semiconductor index .SOX fell 1% and was set for its worst week since March. The gauge has shed more than 20% from its late June record high
Losses in other mega-cap stocks also weighed on markets. Meta Platforms META.O fell 5.2%
“For some of these stocks, the valuations are extremely hard to justify without seeing a tangible product,” said Louis Kondratev, trader at XFUNDs
“But I don’t think the chip sector lost steam completely. Right now, it’s just a healthy pullback.”
Chinese AI startup Moonshot unveiled Kimi K3, a 2.8 trillion-parameter model it said was the world’s largest open-weight AI, adding to investors’ concerns over whether hefty spending by heavyweights will deliver tangible results
Chinese open-afas, senior global investment strategist at Edward Jones Investments
“Supposedly, there are some offerings rivaling the performance of Anthropic and OpenAI… potentially that is contributing today to some of that weakness that started in Asia.”
Shares of Netflix NFLX.O tumbled 9%, after the streaming giant forecast third-quarter numbers below Street estimates on Thursday, weighing heavily on the communication services sector .SPLRCL that slid 2.4%
At 12:07 p.m. ET, the Dow Jones Industrial Average .DJI fell 127.51 points, or 0.24%, to 52,425.46, the S&P 500 .SPX lost 56.07 points, or 0.74%, to 7,477.70 and the Nasdaq Composite .IXIC lost 335.74 points, or 1.30%, to 25,546.21
All three main indexes were poised for weekly losses, as an upbeat start to second-quarter earnings and benign inflation data were overshadowed by concerns over the chip sector
The benchmark S&P 500 touched a two-week low earlier in the session, while the tech-heavy Nasdaq hit a three-week trough before both trimmed some losses
The CBOE Volatility Index .VIX, Wall Street’s fear gauge, hit its highest in more than a week. It was last up 1.08 points to 17.80
Fears of further escalation in conflict in the Middle East mounted as Iran hit a power and desalination plant in Kuwait, in response to a U.S. strike on its bridges and an airport on Friday
U.S. consumer sentiment, however, increased to a five-month high in July, but it is likely temporary as renewed U.S.-Iran tensions raise gasoline prices
Among other movers, Intuitive Surgical ISRG.O shares slid nearly 12.5% after the medical device maker kept its da Vinci procedure-growth forecast unchanged and warned insurance-plan changes may be delaying patient care
Declining issues outnumbered advancers by a 1.76-to-1 ratio on the NYSE and by a 1.73-to-1 ratio on the Nasdaq
