Global technology stocks suffered a severe sell-off on Friday, with chip manufacturers bearing the brunt of a sweeping downturn that rattled markets from Tokyo to New York.
The Nasdaq Composite plunged 1.9 percent in its sharpest single-day fall in a month, while the broader S&P 500 declined 1.7 percent and the Dow Jones Industrial Average fell 1 percent at the opening bell.
Kei Okamura, portfolio manager at financial adviser Neuberger Berman, offered a blunt assessment of the carnage, saying: “The word ‘bloodbath’ is accurate because it is across the board.”
Jim Reid, an analyst at Deutsche Bank, said: “Global equities are continuing to slump, as fresh doubts about the AI trade have driven a pronounced sell-off in tech stocks.”
Reid noted there had been no single trigger for the downturn, which arrived just as the world’s biggest technology companies prepared to report their second-quarter results.
The chaos spread from Asia, where Japan’s benchmark Nikkei 225 sank 4 percent on Friday, having declined more than 10 percent since its record high on June 25.
Taiwan’s Taiex index shed 6.5 percent after $2 trillion chip giant TSMC fell 7.3 percent, just one day after announcing record second-quarter profit but higher-than-expected spending plans that unnerved investors.
The Philadelphia Semiconductor Index fell as much as 5.7 percent on Friday, extending a decline of more than 20 percent from its all-time highs in June, pushing it firmly into bear market territory.
Shares in chip giants including Marvell Technology, ARM Holdings, and Intel have all plunged more than 30 percent over the past month, wiping out substantial gains made earlier in the year.
David Morrison at Trade Nation said: “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.”
A significant catalyst for the sell-off was the launch of Kimi K3 by Beijing-based AI startup Moonshot, which it described as the world’s largest open AI model by parameter count, an indicator of its complexity.
Bernstein analyst Robin Zhu called the Moonshot model “a home run” and said the speed of Chinese innovation is becoming impossible to ignore.
Lian Jye Su, chief analyst at Omdia, said Chinese models were gaining traction because they could be deployed far more cheaply than leading US systems, adding: “They can be run at a fraction of the cost that OpenAI charges its clients.”
Amid the broader carnage, Apple (AAPL) reclaimed its position as the world’s most valuable company after its shares rose 0.4 percent, lifting its valuation to $4.9 trillion and overtaking Nvidia (NVDA), whose shares sank 3.7 percent to push its valuation down to $4.8 trillion.
Apple shares have surged 23 percent so far this year, making it the best performer among the so-called Magnificent Seven group of US tech giants, as investors have rewarded its relative restraint in AI data centre spending.
Netflix (NFLX) also came under heavy pressure, falling nearly 9 percent after forecasting another quarter of slower revenue growth and announcing it would cut the frequency of its viewing-hours report to once a year from twice starting in 2027.
Ben Barringer, an analyst at Quilter Cheviot, said: “Whenever you take away a data point from investors when results aren’t as good as they have been you will get punished by the market.”
Markets also faced additional headwinds from escalating tensions in the Middle East, with US strikes on Iran sending Brent crude prices rising more than 4 percent on Friday to almost $88 a barrel amid concerns about the Strait of Hormuz.
Back in the UK, the FTSE 100 finished the session higher as rising oil prices lifted energy companies including National Grid and Shell, offering a rare bright spot in an otherwise turbulent day for global markets.
SpaceX, meanwhile, saw its stock fall as much as 6.9 percent to $122 a share on Friday, putting it on track to have lost more than $1 trillion in market value from the record high it hit shortly after going public.