Nasdaq 100 futures drop 2% as chip selloff deepens on AI valuation doubts

Nasdaq 100 futures tumbled 2% to 28,638.78 points as a deepening rout in semiconductor stocks erased gains from the AI-driven rally. S&P 500 futures fell 0.84% and Dow Jones Industrial Average futures declined 0.56%, pointing to broad-based weakness ahead of the cash market open.

"AI capital expenditure enthusiasm is beginning to cool, but the semiconductor sector is still markedly outperforming the broader market," said Venu Krishna, equity strategist at Barclays. "This suggests that recent sector rotation is gradual rather than decisive."

Nvidia Corp. dropped 3% in pre-market trading, leading losses among the so-called Magnificent Seven. The Philadelphia Semiconductor Index is approaching bear market territory after falling 4.65% on July 7, trimming its year-to-date gains to roughly 74%. Micron Technology declined as much as 8%, Sandisk Corp. slid 7.3% and SK Hynix Inc. posted double-digit losses in Asian trading. Netflix Inc. slumped 11% after issuing a disappointing forecast, adding to the pressure on growth stocks.

The selloff reflects growing skepticism that AI-related chip demand can justify the sector's elevated valuations after a two-year rally fueled by data center buildouts and large language model training workloads. Samsung Electronics Co. reported a record profit this week yet saw its shares barely move — a sign that even strong earnings may no longer be enough to sustain the trade. Investors now face a key question: whether the rotation out of semiconductors is a tactical pullback or the start of a broader repricing.

The weakness rippled across global markets. Japan's Nikkei 225, China's SSE Composite and Hong Kong's Hang Seng Index all closed lower, while European benchmarks traded in the red during mid-session deals. Brent crude held above $85 a barrel, on course for its biggest weekly gain since April, as fresh hostilities in West Asia added to the risk-off tone. The strengthening of the Japanese yen against the dollar added another layer of pressure on export-oriented tech stocks in Asia.

Bitcoin fell about 2% to $62,790.91, reinforcing its tight correlation with risk-on tech assets. When portfolio managers reduce exposure to semiconductor stocks, margin calls and risk reassessments often force simultaneous selling in crypto positions, traders said. The correlation between Bitcoin and the Nasdaq 100 has remained elevated throughout 2026, with both assets moving in tandem during periods of macro-driven volatility.

Despite the headline losses, market breadth showed pockets of resilience. On Thursday, 369 S&P 500 constituents rose even as the index closed down 0.5%, suggesting the selloff remains concentrated in tech rather than systemic. Indian equity benchmarks bucked the global trend, with the Sensex jumping 964.58 points, or 1.25%, to settle at 78,151.45, supported by buying in Reliance Industries and banking stocks. The divergence highlights how domestic flows and sector composition can insulate certain markets from the global tech rout.

This article is for informational purposes only and does not constitute investment advice.