Key Highlights

● AMD sank Friday as the weeklong chip selloff deepened across semiconductor stocks.

● All 30 PHLX Semiconductor Index members fell, and the index closed at 11,137.29.

● AI financing doubts and Chinese memory-chip competition weighed on the group.

● Lam Research and Texas Instruments report Oct 21; the Fed decides Oct 28.

Chipmakers took another beating

Advanced Micro Devices (NASDAQ:AMD) sank on Friday, one of the hardest-hit large chipmakers on the S&P 500 as the semiconductor selloff stretched into another session. Market data listed AMD among the day's heaviest decliners in the group.

The damage was sweeping. All 30 members of the PHLX Semiconductor Index fell, and the index closed at 11,137.29. Reports indicated that 57 of the 60 stocks in a broader semiconductor basket were falling. Micron Technology (NASDAQ:MU) slid, Broadcom (NASDAQ:AVGO) fell, Arm Holdings (NASDAQ:ARM) sank and Intel (NASDAQ:INTC) tumbled.

Reports on the length of the losing streak differed. Some data sources counted an eighth straight decline for the chip benchmark, while others described a ninth straight drop, and one called it the longest losing run since 2008.

AI spending under the microscope

The main driver was a shift in how investors view the AI trade. Market commentary described a move from asking what artificial intelligence can do to asking how its build-out will be financed. Debt-funded AI infrastructure companies were hit hardest, and the worry spilled over to chip suppliers whose revenue depends on that spending continuing.

For AMD, which sells data-center graphics processors and server chips that compete with Nvidia (NASDAQ:NVDA) and Intel, those doubts center on whether customers' AI revenue will justify their heavy capital spending, according to market commentary. The rotation reportedly erased more than $1 trillion from semiconductor and AI-related stocks over the week.

One market commentator summed up the change in mood. "The AI group is now splitting between companies that can fund the buildout themselves and those that have to borrow," the commentator wrote, adding, "That is a change in character, and it's another reason the leaders no longer look like a safe haven."

Competition from China

A second worry came from Chinese chipmakers. Market commentary pointed to concerns about progress at China's CXMT on advanced 4F2 DRAM memory technology. The fears hit memory makers hardest, but they fed a broader sense that competition in AI hardware could intensify.

A broad tech retreat

The pressure extended well beyond chips. The Nasdaq Composite dropped 572.99 points to 26,140.03, and the S&P 500 fell 84.62 points to 7,659.44 after opening higher. The Dow Jones Industrial Average slipped 175.28 points to 52,002.41. All but seven of the 75 technology stocks in the S&P 500 closed lower, according to market data.

Money flowed into energy, utilities and consumer staples instead. Brent crude climbed $3.94 to $109.86 a barrel on escalating attacks on tankers in the Strait of Hormuz. The VIX volatility index jumped 3.53 points to 19.99.

For the week, the Nasdaq posted its worst performance since June, and the S&P 500 had its biggest weekly drop since June. Rates offered little comfort: the 10-year Treasury yield eased to roughly 5.1 but remained near its highest levels since 2002. Federal Reserve Chair Kevin Warsh, speaking in Bangkok, said simply, "I don't prejudge meetings."

Chip Earnings Ahead Test the AI Trade

Chip-sector earnings arrive next week, with Lam Research (NASDAQ:LRCX) and Texas Instruments (NASDAQ:TXN) reporting Wednesday, Oct 21, and Western Digital (NASDAQ:WDC) on Thursday, Oct 22. The Fed announces its next rate decision on Oct 28. One analyst said that "upcoming Big Tech earnings will still need to demonstrate that the enormous investment in AI is translating." Meta (NASDAQ:META), a major buyer of AI hardware, also reports Oct 21, and Intel follows Oct 29.