Wall Street tech stocks in AI 'bloodbath', Nasdaq drops 1.9% in worst day in a month

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Wall Street Plunges in AI ‘Bloodbath’

Chris Price Fri, July 17, 2026 at 10:45 AM PDT 12 min read

• TM: -1.20%
• TSM: -2.77%

Tech stocks are selling off for the second consecutive day on Wall Street Tech stocks are selling off for the second consecutive day on Wall Street — REUTERS/Brendan McDermid

The US stock market sank on Friday in a "bloodbath" for companies linked to the AI boom. Shares on Wall Street fell heavily in the wake of sharp downturns in Japan and Taiwan, as investors raised questions about the soaring valuations of companies tied to the technology.

Chip manufacturers were hit hardest after a blistering rally earlier in the year driven by surging demand. The Nasdaq Composite, which is dominated by tech companies, plunged by 1.9% in its sharpest fall in a month.

Kei Okamura, portfolio manager at financial adviser Neuberger Berman, said: "The word 'bloodbath' is accurate because it is across the board."

Japan's benchmark Nikkei 225 sank 4% on Friday, having declined more than 10% since its record high on June 25. Taiwan's Taiex index shed 6.5% after $2 trillion chip giant TSMC fell by 7.3% a day after announcing record second-quarter profit but higher-than-expected spending plans.

Jim Reid, an analyst at Deutsche Bank, said: "Global equities are continuing to slump, as fresh doubts about the AI trade have driven a pronounced sell-off in tech stocks." Mr. Reid said there had been no single trigger for the downturn, which came as the world's biggest technology companies prepared to report their second-quarter results.

Tech stocks in Hong Kong were hit hard by Chinese AI start-up Moonshot, which on Friday unveiled a new large language model able to perform close to the levels of tools from US giant Anthropic. The Beijing-based company unveiled Kimi K3, which it described as the world's largest open AI model by parameter count, an indicator of its complexity.

Lian Jye Su, an industry analyst, said Chinese models were gaining traction because they could be deployed far more cheaply than leading US systems. "They can be run at a fraction of the cost that OpenAI charges its clients," he said.

Markets have also come under pressure from renewed hostilities in the Middle East, which have sent oil prices soaring more than 15% this month to over $85 a barrel.

Signing Off...

06:45pm

Thanks for following our updates on markets today as Wall Street was hit by sharp drops in technology companies on fears surrounding an AI bubble. Chip stocks suffered heavy drops on Friday after Beijing startup Moonshot unveiled its new highly sophisticated Kimi-K3 AI model. It led to concerns about the huge investments into AI infrastructure which have fuelled the AI boom, leading to sharp selling of technology stocks.

FTSE 100 Finishes Higher as Rising Oil Price Boosts Index

06:40pm

The UK's FTSE 100 index finished Friday's session higher as higher oil prices boosted some of its constituent energy and utility companies. National Grid and Shell were among the biggest risers on the FTSE 100 index on Friday as mounting tensions between the US and Iran drove a sharp rise in Brent crude prices. US strikes on Iran saw Brent crude rise by more than 4% on Friday to almost $88 a barrel amid concerns about the Strait of Hormuz. Cigarette sellers including British American Tobacco and Imperial Brands also saw their share prices rise as investors pulled away from AI stocks and invested money elsewhere.

France Blocks Access to Prediction Betting Website Polymarket

05:24pm

French regulators have told internet companies to block public access to the Polymarket betting website, over concerns that some bets could be manipulated and that gamblers could be exposed to heavy losses. In a notice posted on its website, France's National Gambling Authority said it had asked for Polymarket to be banned, claiming the site "is promoting an illegal gambling and betting offering."

Prediction markets such as Kalshi and Polymarket allow traders to buy and sell binary "yes" or "no" contracts on the outcome of virtually any event, from foreign interventions to football games and elections. The rise of such websites has led to growing calls for more stringent regulation and suggestions that some bets should be banned entirely. In May, the Spanish government temporarily banned Polymarket and Kalshi from operating in the country.

Chip Stocks Enter Bear Market Territory

05:05pm

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