Dow Jones Industrial Average Slides as Global Tech Stock Selloff Deepens on AI Valuation Fears Today

NEW YORK — The Dow Jones Industrial Average pulled back Friday as renewed weakness in the country's largest technology companies spread to the broader market, even as the blue-chip index had touched a fresh record just a day earlier.

The 30-stock Dow was trading down 187.92 points, or 0.36%, at 51,732.70, retreating from the all-time highs it set earlier in the week as investors grew more cautious about how much they are willing to pay for shares tied to artificial intelligence.

A reversal after record highs

The pullback marked a shift from the momentum the Dow had built earlier in the week. The Dow Jones Industrial Average touched an intraday record on Thursday, eclipsing the prior peak set on June 16, with the gains driven almost entirely by stocks outside the technology sector. Healthcare, financial and industrial names had carried the index higher even as megacap tech stocks lagged.

That divergence carried into Friday, but this time without the offsetting strength that had propped up the broader market. US stock futures edged lower Friday after the major indexes ended mixed in the previous session, as renewed weakness in megacap technology stocks offset optimism driven by a bullish outlook for memory-chip makers.

Big Tech names under pressure

The selling pressure was concentrated heavily among the largest technology companies in the market. Megacap technology shares remained under pressure Friday, with Apple down 6.1%, Nvidia off 1.6%, Microsoft down 3.5%, Amazon falling 3.1% and Meta Platforms shedding 2.7%.

The declines extended a rough stretch for some of the market's most closely watched names. Apple and Microsoft had already weighed on the so-called Magnificent Seven names earlier in the week after both companies announced price increases on consumer hardware tied to rising memory-chip costs, with Apple falling more than 6% and Microsoft losing over 3% in a single session.

Pressure also showed up in exchange-traded funds tracking the group. The Roundhill Magnificent Seven ETF, which offers equal-weight exposure to Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla, edged down 0.18% to $60.95 in premarket trading amid the broader technology selloff.

Memory chips tell a different story

Not every corner of the technology sector struggled. The same forces pushing up costs for consumer hardware makers were boosting a different group of chipmakers tied directly to memory production. Micron surged 15.7% after reporting strong earnings and issuing a robust revenue outlook for the August quarter, lifting other chip-related stocks including Sandisk, up 22%, Applied Materials, up 13.4%, and Western Digital, up 4.9%.

Micron posted blockbuster earnings Wednesday after the close, reporting record revenue of $41.46 billion and adjusted earnings of $25.11 per share. A market strategist framed the divide running through the technology sector. "There are basically two stories going on here," TheStreet Pro contributor Stephen Guilfoyle said. "One... growing demand for high bandwidth memory as well as traditional Flash and DRAM. Two... surging prices for anything having to do with memory or storage."

That dynamic has left investors trying to separate companies benefiting from surging memory demand from those facing higher input costs as a result of it — a split that has rippled through both winners and losers in Friday's trading.

Overseas markets show the same anxiety

The reassessment of AI-related valuations wasn't confined to U.S. markets. Trading in Asia showed even sharper swings tied to the same underlying concerns. Trading in South Korea was temporarily halted after an 8% decline in the benchmark Kospi index triggered a circuit breaker designed to curb panic selling, with the index ultimately closing down 5.8%.

In Japan, SoftBank Group plunged more than 12%, while Advantest declined over 9% and Tokyo Electron fell more than 3%.

A market analyst pointed to a broader shift in how investors are approaching technology valuations after a long rally. "The long-term investment case for AI remains compelling, but investors are becoming far more selective about which companies can justify the valuations the market has assigned to them," said David Makaryan, a senior partner at Alpha Pacific Group.

A pullback in a volatile week

Friday's decline came at the end of a choppy week for U.S. markets, one that included a fresh Dow record, a closely watched IPO, and persistent rotation between tech and non-tech stocks. The Nasdaq Composite had declined Thursday despite strong earnings from Micron Technology, as investors rotated out of major tech names, while the broader market was mixed, with gains in non-AI stocks lifting the Dow to its fresh intraday record.

Sector performance that day illustrated just how split the market had become. Six of the 11 sectors in the S&P 500 rose Thursday, led by industrials, up 2.19%, followed by healthcare and materials, up 1.49% and 1.39% respectively, while consumer discretionary lagged with a 1.78% drop, followed by consumer staples and communication services, down 1.08% and 1.02%.

What's weighing on sentiment

Beyond the AI valuation debate, broader macroeconomic and geopolitical concerns continued to factor into trading. Oil prices have remained volatile amid tensions tied to the Middle East. A U.S. official said Iran was behind an attack on a cargo ship near the coast of Oman in the Strait of Hormuz, sailing under a Singapore flag, though the vessel's operators reported no casualties and no environmental impact. Despite that, oil prices continued to fall Friday as more tankers exited the Strait of Hormuz, easing concerns about supply disruptions.

There were also signs the broader economy remains on solid footing even as markets wobble. Fresh data this week showed the U.S. economy growing faster than previously estimated and inflation rising in line with expectations, prompting a slight reduction in Federal Reserve tightening bets.

The bigger picture

For now, the Dow's pullback appears to reflect a broader reassessment of technology valuations rather than a fundamental shift in the economic outlook. With Micron's results reinforcing optimism around long-term AI infrastructure demand even as megacap tech names retreat on cost concerns, investors appear to be drawing sharper distinctions between companies positioned to benefit from the AI buildout and those facing rising expenses because of it.

Markets are expected to remain volatile in the sessions ahead as investors continue parsing earnings, economic data and geopolitical developments for clearer signals on where the rally — and the broader AI investment cycle underpinning much of this year's gains — goes from here.