U.S. Stocks: Chip Stocks Slump on AI Spending Concerns, Philadelphia Semiconductor Index Plunges 4.5%

U.S. stocks ended Friday (24th) mixed, with the Philadelphia Semiconductor Index plunging 4.5% and the Nasdaq closing lower, as investors sold chip stocks amid growing concerns over massive artificial intelligence (AI) spending ahead of the next wave of large tech companies reporting earnings. Meanwhile, falling oil prices provided partial support to Wall Street, despite ongoing Middle East conflicts.

The S&P 500 edged higher, with technology stocks being the biggest drag. The S&P Technology Index underperformed the broader market due to falling chip stocks, closing down 0.88%.

Investors are awaiting earnings reports from Microsoft (MSFT-US), Amazon (AMZN-US), Meta (META-US), and Apple (AAPL-US) next week, but market enthusiasm has clearly cooled since Alphabet (GOOGL-US) announced a significant increase in its capital expenditure plan after Wednesday’s close, especially as Alphabet also faces cash burn issues.

Intel reported better-than-expected earnings and revenue guidance after Thursday’s close, along with plans to increase spending over the next two years. Despite this, its stock plunged 7.9% on Friday, moving in tandem with the Philadelphia Semiconductor Index, which dropped 4.5%.

For the week, the Dow Jones Industrial Average fell 0.4%, marking its third consecutive weekly loss. The S&P 500 and Nasdaq Composite both posted their second straight weekly decline, with the S&P down 0.6% and the Nasdaq down 2%.

Among the S&P 500’s 11 major sectors, real estate performed best, rising 2.4%, followed by materials with a 1.44% gain.

A factor providing relief to the market was Friday’s 3% drop in crude oil futures. After sharp gains over the past five trading sessions, traders took profits. Additionally, sources revealed that China is pushing to restart stalled peace talks between the U.S. and Iran.

However, U.S. missiles continue to strike multiple targets inside Iran. Earlier, President Trump vowed to deliver "major military punishment" to Tehran and its Houthi allies in Yemen.

Moreover, the Trump administration imposed new 10% and 12.5% tariffs on goods from 60 trade partners, citing inadequate enforcement of forced labor bans. This move coincided with the expiration of the temporary global 10% tariff.

Data released Friday showed U.S. July services activity accelerated, partly driven by FIFA World Cup and Independence Day-related spending, while manufacturing growth slowed to its weakest pace since March.

U.S. Stock Market (July 24) Key Index Performance:

Dow Jones Industrial Average rose 235.60 points, or 0.46%, closing at 51,947.25.

Nasdaq Composite fell 161.87 points, or 0.64%, closing at 24,975.82.

S&P 500 rose 3.68 points, or 0.05%, closing at 7,411.98.

Philadelphia Semiconductor Index fell 524.95 points, or 4.25%, closing at 11,818.89.

NYSE FANG+ Index fell 123.99 points, or 0.73%, closing at 16,824.50.

Among the S&P 11 major sectors, real estate led gains, while technology was the biggest drag (Image: finviz)

Key Individual Stocks

NYSE FANG+ tech giants mixed. Meta (META-US) fell 1.80%; Apple (AAPL-US) rose 3.53%; Alphabet (GOOGL-US) rose 0.65%; Microsoft (MSFT-US) rose 0.031%; Amazon (AMZN-US) dropped 0.66%.

Philadelphia Semiconductor Index components broadly declined. Nvidia (NVDA-US) fell 0.92%; Broadcom (AVGO-US) fell 2.69%; Micron (MU-US) plunged 6.99%; Qualcomm (QCOM-US) fell 2.42%; Applied Materials (AMAT-US) dropped 4.72%; Texas Instruments (TXN-US) fell 1.90%; AMD (AMD-US) fell 3.29%.

Taiwanese ADRs mostly closed lower. TSMC ADR (TSM-US) fell 2.93%; ASE ADR (ASX-US) dropped 6.64%; UMC ADR (UMC-US) fell 6.66%; China Telecom ADR (CHT-US) rose 0.92%.

Corporate News

Samsung Electronics and SK Hynix will reach major agreements with U.S. tech giants during South Korean President Yoon Suk-yeol’s visit to Silicon Valley. According to the Presidential Office Policy Chief, these agreements will include long-term supply contracts for next-generation memory chips, strategic investment partnerships, and multiple memorandums of understanding. During his San Francisco visit, President Yoon will hold individual meetings with CEOs of Nvidia, OpenAI, Anthropic, and Broadcom.

Apple will launch its new Apple Upgrade leasing program in the U.S. next week, further adjusting its hardware sales model. This is Apple’s most significant sales strategy shift to date, allowing consumers to access iPhones, iPads, Macs, and Apple Watches with lower monthly payments and upgrade or buy out devices early during the contract. iPhones and Apple Watches will have 24-month lease terms, while Macs will be on 36-month plans.

Wall Street Analysis

Peter Andersen, CEO of Andersen Capital Management, said that over the past few years, investors have poured into tech stocks due to optimism about AI-driven growth, but are now starting to worry about the need for continuous capital spending.

"People are beginning to ask: How do we interpret these massive expenditures? How long must we wait before these investments translate into real profits?" Andersen said. "FOMO (fear of missing out) is gradually turning into fear of massive overbuilding."

Bill Northey, Head of Investments at U.S. Bank Asset Management Group, said, "What’s happening in the Middle East could have real economic consequences by restricting oil flows and testing the global economy’s ability to absorb such shocks." While he expects the Fed to hold rates steady next week given this week’s oil price surge, he added, "Chairman Kevin Warsh has clearly stated his commitment to bringing U.S. inflation back to the Fed’s target, and we believe he will follow through."

Regarding chip stocks, Northey said, "Right now, we’re just seeing massive daily capital flows in and out of this sector. But if we take a longer view—looking at where strong earnings growth is actually occurring, which areas have this growth in the current environment, and what’s driving 2026 and 2027 earnings expectations—these companies remain the primary beneficiaries. We just need to understand that sentiment-driven capital flows will continue in this space and its periphery."

All figures are updated as of press time. Please refer to actual quotes for real-time pricing.