US chipmakers and other high-flying stocks slide as AI trade wobbles

The latest market report highlights that A rotation out of the biggest winners of the recent surge gathered momentum the current week, sending chip stocks toward their steepest weekly slide in more than a year and sparking fresh concerns around the sustainability of the AI-fuelled surge.

The jitters in semiconductor stocks were felt from Seoul to Europe as market participants pulled back from AI-exposed stocks that had powered portfolio returns through much of this year.

The Philadelphia SE Semiconductor Index is down 11% the current week, which would mark its largest one-week decline since March 2025, if current marks hold. The index was down nearly 24% from its late June all-time high, on pace to confirm it has been in a bear market.

"The pullback reflects earnings-taking and rising scrutiny of AI capex sustainability," stated Toni Meadows, head of investment at BRI Wealth Management.

"Valuations in semi-conductor stocks had priced near-perfect demand, for what has been a cyclical area in the past, so was always going to leave stocks vulnerable at some point in what has been a rapid climb."

The chip index has advanced nearly 62% for the year, as of early trading on Friday.

Shares of Nvidia declined 3%, while Qualcomm and Broadcom lost around 2% each. Memory chip darlings Micron and SanDisk lost around 3% each.

SpaceX lost 4%, as a last-second abort of Starship's 13th flight test piled more pressure after slipping below the $135 per share IPO price earlier the current week.

SK Hynix's U.S.-listed shares eased 2.7% and were trading near their offering price. The stock has lost more than 9% the current week.

Market watchers have highlighted several reasons for this month's sharp reversal.

Chinese AI startup Moonshot unveiled Kimi K3, a 2.8 trillion-parameter model that it stated is the world's largest open-weight AI system, rekindling investor scrutiny of the pace of potential returns from hefty AI investments by U.S. tech firms.

A report on Thursday suggested Alphabet's Google is months behind schedule on the release of Gemini 3.5 Pro, its most powerful flagship AI model.

Traders globally have had a volatile start to July. South Korea's KOSPI index confirmed a bear market last week, while still being up nearly 70% for the year. Japan's Nikkei tumbled into correction territory on Friday.

Europe's tech sector is among the top sectoral losers the current week, after having notched its biggest quarterly jump since 2001 in June.

After outperforming the benchmark S&P 500 by more than two-to-one this year, the S&P 500 Momentum Index has pulled back 10% in July, compared to a 0.8% dip in the broader market.

Firm forecasts from the world's largest chip manufacturer, Taiwan's TSMC, and European semiconductor equipment maker ASML did little to halt the slide.

The focus now shifts to earnings notes from two of Wall Street's so-called 'Magnificent Seven' group. Alphabet and Tesla are scheduled to announce quarterly earnings the week ahead.

Space stocks were additionally down the current week after rallying earlier this year in anticipation of the potential lift to the sector from SpaceX's debut.

Rocket Lab and Intuitive Machines were down 3% and 4% on Friday and were set to log losses of around 20% each the current week.