US stocks fell on Friday, with the major indexes heading toward weekly losses as semiconductor shares kept dragging the market lower. The Dow Jones Industrial Average dropped 1%, the S&P 500 fell about 0.8% and the Nasdaq Composite shed roughly 1.6% as investors pulled back from the tech trade that had powered the market higher from March lows.
The move mattered because the selloff was broad enough to hit the biggest names tied to the market’s artificial intelligence story. Chip stocks tracked by the PHLX Semiconductor Index tumbled more than 3% and the index entered a bear market, a technical marker that means a decline of 20% or more from a recent peak. For investors in semiconductor shares, that turned a one-day slide into evidence that the rush into AI-linked stocks is losing force.
Netflix added to the pressure. The stock fell 12% in the first minutes of trading after its third quarter revenue forecast disappointed the Street, another sign that strong expectations are now harder to beat. The company is still battling a dynamic and competitive entertainment landscape, but Friday’s drop showed how quickly investors are punishing any sign that growth may not match the pace they had priced in.
That weakness came even as Chinese AI startup Moonshot unveiled Kimi K3 on Friday, saying it is the world’s largest open AI model and that it rivals Anthropic’s frontier Fable model. The timing underscored the market’s split mood: fresh AI announcements are still arriving, but the tech-driven rally from March lows has stalled as investors reassess how much companies are spending on artificial intelligence. The pullback also spilled beyond the US, with Japan's Nikkei 225 falling 4% after Asian stocks weakened.
For now, the next test is not another headline grab from AI but the data that helps explain whether the market’s caution is spreading. A few smaller banks, including Truist Financial Corporation and Fifth Third Bancorp, are still due in the week’s earnings docket, and the University of Michigan’s consumer sentiment report will offer a reading on how Americans are thinking about the economy and higher gas prices. That makes Friday’s drop less like a one-off reaction and more like a market asking whether the AI trade has gone far enough.
