US tech stocks tumble as AI valuation fears and Middle East tensions rattle markets
US equities retreated on Friday as semiconductor valuation concerns, emerging Chinese artificial intelligence competition, and escalating Middle East tensions drove a broad selloff in growth assets.
US stock markets closed lower on Friday, led by a pronounced retreat in the technology sector. The Nasdaq Composite dropped 0.7 percent, while the S&P 500 fell 0.5 percent and the Dow Jones Industrial Average slipped 0.3 percent. Earlier in the session, volatility was more acute, with the Nasdaq falling 1.81 percent at the opening bell.
Semiconductor stocks bore the brunt of the selling pressure amid mounting valuation concerns. Nvidia tumbled approximately 4 percent, causing it to slip behind Apple in market capitalisation and relinquish its title as the world’s most valuable listed company. This weakness was compounded by Chinese startup Moonshot AI unveiling a new model that analysts believe could rival advanced US systems, following the earlier 2025 emergence of DeepSeek’s low-cost AI platform.
Corporate earnings and operational setbacks further dampened investor sentiment. Netflix plunged 10.6 percent after reporting quarterly revenue of $12.6 billion, narrowly missing Wall Street expectations. The streaming company’s annual revenue growth of 13.4 percent marked its slowest expansion pace in nearly three years.
Operational hurdles also punished recent market entrants. SpaceX shares dropped 4.7 percent to $124.85 following a cancelled rocket launch. Chief executive Elon Musk stated that engine issues triggered an automatic launch abort, weighing on the firm shortly after its public listing.
Broader growth stocks faced headwinds regardless of individual financial performance. Medical technology firm Intuitive Surgical declined 11.1 percent despite delivering quarterly results that exceeded analyst estimates. Investors reacted cautiously to the company’s forward outlook against a backdrop of widespread weakness in growth-oriented equities.
Commodities and Macro Response
Geopolitical risks simultaneously triggered a sharp repricing in global commodities. Crude oil prices surged as military tensions between the United States and Iran intensified across the Gulf. Brent crude futures rose 2.1 percent to $86 a barrel, and US West Texas Intermediate climbed 2.4 percent to $80.86.
Investors priced in heightened risks to key shipping routes, including the Strait of Hormuz and the Red Sea. These fears raised the possibility of broader disruptions to international energy supplies. Consequently, the inflationary implications of higher energy costs kept precious metals elevated but mixed.
Spot gold remained flat at $3,970.35 per ounce, while US gold futures for August delivery fell 0.5 percent to $3,973.10. Other metals retreated, with spot silver falling 0.8 percent to $55.05, platinum dropping 3.3 percent to $1,563.49, and palladium slipping 1.5 percent to $1,230.42. Meanwhile, the benchmark 10-year US Treasury yield eased to 4.52 percent, down from 4.57 percent in the previous session.
