Summary
- The Nasdaq Composite closed down 1.40% as selling pressure centered on AI semiconductor stocks.
- The Philadelphia Semiconductor Index fell 20% from its peak, entering bear-market territory.
- Concerns are growing over profit-taking tied to AI infrastructure investment and the rise of Chinese AI startups, clouding the profit outlook for major US AI companies.
Forecast Trend Report by Period
A selloff in artificial intelligence chip stocks pushed all three major US stock indexes lower on July 17.
The Dow Jones Industrial Average fell 406.55 points, or 0.77%, to 52,146.42 at the close on the New York Stock Exchange. The S&P 500 dropped 76.08 points, or 1.01%, to 7,457.69, while the tech-heavy Nasdaq Composite slid 361.70 points, or 1.40%, to 25,520.24.
For the week, the S&P 500 fell 1.6% and the Nasdaq lost 2.9%. The Philadelphia Semiconductor Index dropped 1.63% on the day, extending its decline to a third straight session.
The Philadelphia Semiconductor Index has fallen 20% from its closing high of 14,634.72 on June 22, slipping into bear-market territory.
Nvidia fell 2.21%, while Micron Technology slipped 0.5%, Advanced Micro Devices lost 1.03% and Intel dropped 2.0%. SK Hynix American depositary receipts, however, rebounded 1.13%.
Memory-chip stocks led the market rally in the second quarter, but concerns over whether massive AI infrastructure spending will pay off have triggered profit-taking.
Taiwan Semiconductor Manufacturing Co. posted blowout second-quarter earnings, handily beating market expectations on surging demand for AI chips. Even so, investors remain skeptical that the rally in memory-chip stocks can last for an extended period.
Sentiment also came under pressure from Moonshot AI, a Chinese AI startup. Its latest model, Kimi K3, was released for free and has drawn favorable assessments for narrowing the gap with top models from OpenAI and Anthropic. That has added to concerns over the profit outlook for major US AI companies.
Wall Street analysts say companies may choose to build customized AI models using open Chinese models rather than pay high fees to use closed models from OpenAI or Anthropic.
Earlier, in early 2025, Chinese AI startup DeepSeek rattled shares of major AI-related companies, including Nvidia, after releasing a powerful low-cost AI model.
David Morrison, a senior market analyst at Trade Nation, said earnings and demand trends remain solid, but the recent profit-taking suggests some investors are beginning to question how long the current pace of growth can continue.
Jeong-sam Go, Hankyung.com reporter, jsk@hankyung.com
Korea Economic Daily
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