Nasdaq Futures Drop 2% as Global Chip Sell-Off Intensifies Amid AI Spending Jitters

New York, NY - July 19, 2026 - Nasdaq futures saw a significant decline of 2% in early trading, mirroring a broader sell-off in the global semiconductor sector. Mounting concerns over artificial intelligence (AI) spending and increased competition from Chinese AI startups are weighing heavily on tech stocks, putting major indices on pace for a losing week.

The S&P 500 lost 0.5% on Friday, with the tech-heavy Nasdaq Composite dropping 0.7% as the sector came under intense scrutiny. The Dow Jones Industrial Average also declined, trading around 0.4% lower.

The downturn was particularly pronounced in the semiconductor industry. The iShares Semiconductor ETF (SOXX) and the VanEck Semiconductor ETF (SMH) both shed around 1%. Shares of key players like Applied Materials (AMAT) fell 3%, LAM Research (LRCX) dropped 1%, Intel (INTC) shed over 3%, and KLA Corporation (KLAC) declined roughly 3%. Even AI darling Nvidia (NVDA) saw its shares fall more than 1%.

These losses extend declines seen in the previous session, also led by semiconductors. Adding to the negative sentiment, Chinese startup Moonshot AI unveiled a new AI model that it claims narrows the gap with leading U.S. offerings, intensifying competition concerns.

The SMH is now down 9% for the week, marking its third weekly decline in four weeks. Major stock benchmarks are also down week-to-date, with the S&P 500 off by over 1% and the Nasdaq slipping more than 2%.

"We are seeing signs of fatigue, with end-user demand for AI becoming more price sensitive and the market starting to penalize companies that are ramping spending too aggressively," said Angelo Kourkafas, senior investment strategist at Edward Jones. "We view this volatility as a signal that the AI theme is likely maturing rather than breaking, which is a healthy part of how transformative investment cycles evolve."

Beyond tech, Netflix (NFLX) shares were a notable laggard, falling over 8% after its forecast failed to alleviate investor concerns about slowing growth.

Geopolitical tensions also remained a backdrop, with further escalations in the U.S.-Iran war causing oil prices to rise. West Texas Intermediate crude futures traded above $81 per barrel, and Brent crude futures were above $86.

Kuwait reported an attack on a power and water desalination plant, while U.S. Central Command confirmed strikes against dozens of Iranian military targets. Iran claimed attacks on U.S. forces in Syria and Bahrain, widening regional conflict fears. This renewed conflict has disrupted energy flows through the Strait of Hormuz, a critical oil transit route.

Market Movers:

Travelers Companies Surges on Strong Earnings

Shares of Travelers Companies (TRV) soared over 8% after reporting second-quarter earnings per share of $10.04, significantly beating Wall Street's consensus of $5.41. The company's net income also rose to approximately $2.2 billion from $1.5 billion year-over-year. CEO Alan Schnitzer highlighted the company's investment in technology, including AI, as a key driver of its competitive advantage.

Meta in Talks to Lease Compute Power to Anthropic

Meta (META) is reportedly in negotiations to lease computing power to AI firm Anthropic, according to The New York Times. The potential deal could be worth as much as $10 billion, though talks are in the early stages. Meta shares, while down initially, showed some recovery after the news but remained negative for the session.

Retail Stocks Show Resilience

In contrast to the broader market, retail stocks have shown resilience this week. The State Street PDR S&P Retail ETF (XRT) has gained over 2.5%, outperforming the S&P 500. Auto retailer Group 1 Automotive (GPI) led the sector with a gain of over 9%, followed by CarMax (KMX) and National Vision (EYE), both adding more than 8%.

European Markets End Lower

European stock markets finished Friday's session in the red, with the Stoxx 600 index sliding 0.41%. Tech stocks were particularly hard-hit, tumbling 2.7%, mirroring the global trend. Most major European bourses, including Italy's FTSE MIB and France's CAC 40, closed lower, while the UK's FTSE 100 managed a slight gain.

Berkshire Hathaway Outperforms

Berkshire Hathaway (BRK.B) shares climbed over 1% on Friday, outperforming the market as investors rotated into defensive stocks. Optimism around increased share repurchases in the second quarter also fueled the gains.

Consumer Sentiment Improves

A University of Michigan survey indicated an improvement in consumer sentiment for July, driven by falling energy prices and lower inflation expectations. The sentiment gauge reached its best level since February, though it remains down year-over-year.

Treasury Yields Fall, Gold Rises

U.S. Treasury yields tumbled as investors monitored Middle East tensions and digested economic data suggesting the U.S. economy is weathering inflationary pressures. Yields on the 10-year Treasury note fell to 4.525%, and the 2-year Treasury note shed 3 basis points to 4.124%. Gold prices rose, snapping a losing streak, as investors sought stability.

SpaceX Stock Dips After Starship Test Aborted

SpaceX (SPCX) shares continued to fall in premarket trading following the abort of its Starship rocket test flight. Founder Elon Musk cited an engine ignition failure and stated that propellant was being offloaded, with the next launch attempt expected in a few days.

Chip Sell-Off Deepens Globally

The semiconductor sell-off showed no signs of abating, spreading from Asia to Europe and impacting U.S. premarket trading. The VanEck Semiconductor ETF (SMH) fell over 4% on Friday alone. Stocks like Astera Labs (ALAB) and Marvell Technology (MRVL) are leading the decline this week within the sector.

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