TLDR
- US stock futures fell sharply Friday, with Nasdaq-100 futures down around 2%
- Netflix dropped over 9% after its Q3 revenue forecast missed Wall Street expectations
- Chip stocks fell more than 4%, with the Philadelphia Semiconductor Index leading losses
- Alphabet slid 4.4% after reportedly delaying its Gemini 3.5 Pro AI model release
- Iran tensions and rising oil prices added to a risk-averse mood across markets
US stocks are heading for weekly losses as a sell-off in tech and chip stocks continues to weigh on markets. A weak forecast from Netflix and renewed doubts about AI spending are driving the declines.
Netflix Miss Shakes Tech Stocks
Netflix fell more than 9% in extended trading after the streaming company issued third-quarter revenue and profit guidance that came in below Wall Street estimates. The disappointing outlook overshadowed an otherwise strong second-quarter earnings report.
Netflix cited a “dynamic and competitive” entertainment landscape as it battles rivals for viewers. The stock’s drop added pressure to an already struggling tech sector.
Alphabet also hit tech sentiment, falling 4.4% after a report said the company delayed the release of its Gemini 3.5 Pro AI model. The news rattled investors who have been watching AI developments closely.
Chip Stocks Lead the Decline
The Philadelphia Semiconductor Index fell more than 4% on Thursday. That selling continued into Friday, with Nasdaq-100 futures dropping roughly 2%.
TSMC reported strong second-quarter earnings and raised its revenue guidance, driven by demand from the AI industry. But the company also forecast higher capital spending for the year.
That spending outlook raised fresh concerns about whether the growth priced into AI-linked stocks is realistic. Investors sold chip stocks despite the positive earnings headline.
Asian markets followed Wall Street lower. Japan’s Nikkei 225 fell 4%, and chipmaking stocks in Japan and China dropped sharply on Friday.
SpaceX also fell around 4% in after-hours trade after the company aborted a major rocket test flight at the last minute.
Deutsche Bank analysts said in a note that “global equities are continuing to slump, as fresh doubts about the AI trade have driven a pronounced selloff in tech stocks.”
S&P 500 futures fell about 1.1%, Dow Jones futures dropped 0.7%, and Nasdaq-100 futures slid 2.3% as of early Friday morning.
Geopolitics and Oil Add Pressure
The US continued military strikes against Iran, which drew retaliatory attacks from Tehran. Disruptions in the Strait of Hormuz pushed oil prices higher.
Rising energy prices are adding to inflation concerns. Dallas Fed President Lorie Logan said interest rates may need to go “modestly” higher to manage the outlook.
She flagged upside risks to inflation from energy prices, even after June inflation data came in softer than expected earlier this week.
Several bank earnings are due Friday, including Truist Financial, Fifth Third Bancorp, and Regions Financial. University of Michigan consumer sentiment data will also be released.
Next week, attention will turn to major earnings from Alphabet, Amazon, Microsoft, and Meta.
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