Wall Street is sending a split-screen message about artificial intelligence. Even as the Dow Jones Industrial Average climbed to a fresh record — jumping 600 points, according to Investopedia — a sell-off in AI-related shares dragged the Nasdaq lower and pulled the broader market down for the week. As LancasterOnline and The Daily Independent both put it, the majority of US stocks rose, but sinking AI names sent the market lower.
The pressure has been sharpest in chipmakers. Bloomberg reports that semiconductor stocks opened the third quarter with their worst two-day sell-off in nearly a month — a striking reversal after the Philadelphia Stock Exchange Semiconductor Index posted its best quarter ever, an 88% advance. In a Bloomberg video, analyst Windsor argued the market has "mistaken" demand for AI compute, hinting that expectations may have run ahead of reality.
Skepticism is spreading beyond traders. Morningstar reports that a top Fidelity manager is declining to buy the FTSE 100's AI stocks, while odaily.news notes that mounting AI "horror stories" tied to moves by Meta and Anthropic have prompted investors to reassess their AI bets. Bloomberg also flags that Asian markets were set to fall on tech worries, and Hindustan Times warns that Korea's chip-driven rally has pushed its stock market into a "danger zone."
Not everyone is bearish. Some AI shares bounced back as world shares rallied, and Jim Cramer, per Yahoo Finance, discussed how Nvidia could change the "direction of the price." Intellectia AI points to a July semiconductor rally in names like Nvidia and AMD.
Why it matters: AI stocks have powered much of the market's gains, so wobbles in these giants can shake portfolios far beyond the tech sector.