Tech stocks fell for a third straight session Friday as the semiconductor complex extended one of its worst weeks of the year, with investors fleeing the AI hardware trade after a Chinese startup unveiled the world's largest open-weight model.
The selloff had already started in Asia overnight, where Moonshot AI showcased Kimi K3 — a 2.8-trillion-parameter model billed as the world's largest open-weight AI system — at the World Artificial Intelligence Conference in Shanghai.
The release hardened the bear case that cheap open-source competition caps the revenue hyperscalers can earn on their capex, and chip stocks wore it.
Energy pulled the other way.
West Texas Intermediate crude, as tracked by the United States Oil Fund (USO), jumped 3.2% to $81.48 a barrel as commercial vessels continued to avoid the Strait of Hormuz following renewed strikes between the U.S. and Iran.
Brent crude climbed 3.0% to $86.73, leaving the global benchmark up 8.6% over the past month and reviving the pass-through inflation risk that has kept the Federal Reserve boxed in.
The S&P 500 fell 0.6% to 7,489.92. The Dow Jones Industrial Average was nearly unchanged at 52,500. The Nasdaq 100 slid 1.4% to 28,610.
Within Magnificent Seven stocks, Meta Platforms Inc. (META) was the standout loser, down 5.0%, followed by Alphabet Inc. (GOOGL), down 2.5%.
The Russell 2000 dipped 0.4% to 2,960. The CBOE Volatility Index jumped 6.2% to 17.77.
Friday's Performance In Major US Indices
According to market data:
- The Vanguard S&P 500 ETF (VOO) fell 0.7%.
- The SPDR Dow Jones Industrial Average ETF Trust (DIA) slipped 0.3%.
- The Invesco QQQ Trust (QQQ) dropped 1.2%.
- The iShares Russell 2000 ETF (IWM) eased 0.4%.
The AI Trade Bleeds Out
The Energy Select Sector SPDR Fund (XLE) led the tape, up 0.5% as crude ripped higher, with the Industrials Select Sector SPDR Fund (XLI) close behind at 0.4%.
At the other end, the Communication Services Select Sector SPDR Fund (XLC) was the worst performer, down 1.8% under the weight of Meta, Alphabet and Netflix Inc. (NFLX).
Shares of the streaming giant sank 7.5% to $68.81 after guiding to another quarter of decelerating sales in its Thursday post-close print, a forecast that landed badly with a shareholder base already paying up for growth.
The Consumer Discretionary Select Sector SPDR Fund (XLY) fell 1.0%, the Technology Select Sector SPDR Fund (XLK) lost 0.6% and the Financial Select Sector SPDR Fund (XLF) shed 0.4%.
The VanEck Semiconductor ETF (SMH) fell by a further 1.2%, pushing the Philadelphia Semiconductor Index down roughly 11% on the week and about 24% from its late-June record, entering a bear market.
The Travelers Companies Inc. (TRV) was Friday's marquee winner, surging 7.9% to a fresh 52-week high after second-quarter EPS of $10.26 obliterated the $5.34 consensus on revenue of $11.53 billion versus $11.26 billion expected.
AST SpaceMobile Inc. (ASTS) was the Russell 1000's top gainer, up 8.9% to $59.91, with no confirmed news catalyst in Friday's tape. The satellite-to-smartphone name has been whipsawing since a $1 billion convertible notes offering knocked the shares sharply lower.
Bloom Energy Corp. (BE) rebounded 5.9% to $218.99, clawing back part of Thursday's roughly 14% slide, which came as investors digested short-seller allegations and supply-chain concerns despite the company securing a $1.7 billion project investment.
Sandisk Corp. (SNDK) rose 4.7% to $1,477, after a brutal selloff.
The losers were led by Intuitive Surgical Inc. (ISRG), which cratered 12.5% to $351.99 despite beating on both lines after Thursday's close.
Revenue rose 18.5% year-over-year to $2.89 billion and adjusted EPS of $2.80 landed 11.9% above consensus, but management held full-year procedure growth guidance at 13.5%-15.5% rather than raising it.
