Chip Selloff Deepens, Netflix Tumbles 9% on Guidance

Wall Street heads into Friday on the back foot after a deepening semiconductor selloff overshadowed a strong run of earnings. As covered in yesterday's analysis, the chip trade had briefly roared back to life; on Thursday it reversed hard, with a raised capital-spending outlook from Taiwan Semiconductor reigniting worries about how much artificial-intelligence demand is really being priced in. A weak Netflix guide after the bell added to the pressure on tech. Here is the picture at the open.

Futures Point Lower After Thursday's Fade

S&P 500 E-mini futures point modestly lower, off about 0.3 percent, after Thursday's cash close of 7,533.77, down 0.51 percent as the tech-led slide gathered pace. The Nasdaq led the major benchmarks lower, dragged by the semiconductor complex, while the Dow held up better as money rotated toward defensives and financials. The tape reversed the chip-led bounce that had lifted stocks earlier in the week, leaving the S&P a couple of percent below the 7,575 record it kissed on July 10. With a fresh batch of bank and insurer results due Friday, futures are trading the AI-valuation question rather than any single overnight data point.

Chip Selloff Deepens Despite Strong TSMC Numbers

The heart of the move is semiconductors. The Philadelphia semiconductor index sank about 4.3 percent on Thursday, its worst session in weeks, even though the sector's marquee name delivered. Taiwan Semiconductor Manufacturing Company posted second-quarter profit up roughly 77 percent and guided third-quarter revenue to a robust $44.6 billion to $45.8 billion, yet its US shares still fell about 4.6 percent in premarket. The sticking point was capital spending: TSMC lifted its full-year capex outlook to $60 billion to $64 billion, up from a prior $52 billion to $56 billion range. Rather than cheer the demand signal, the market read the heavier spend as another sign that AI-infrastructure costs keep climbing, and it punished the group. Micron, AMD, Intel and Broadcom each shed more than 5 percent.

Netflix Sinks on Soft Guidance

The after-hours story belonged to streaming. Netflix fell about 9 percent in extended trade after its second-quarter results and, more importantly, its third-quarter guidance failed to impress a market that had priced in near-perfection. Management pointed to a second straight quarter of slowing sales growth, and the shares added to the pressure already weighing on the tech-heavy indexes. The reaction is a reminder of how little room for disappointment sits under the highest-multiple names after a long run to records. Friday's docket keeps the earnings theme alive, with Travelers, Truist Financial, Fifth Third Bancorp and Intuitive Surgical among the reports due before and around the open.

AI-Valuation Jitters Set the Tone

Tying the moves together is a broader unease about artificial-intelligence valuations. The paradox of the week was stark: earnings from the AI supply chain were solid, yet the stocks sold off because the spending needed to sustain that growth keeps rising. TSMC's capex bump crystallized the worry that the exponential trajectory investors have baked into chip and megacap valuations may be harder to justify as costs compound. That is a sentiment shift rather than a data shock, and it tends to hit the most crowded, highest-multiple corners of the market first, which is exactly where Thursday's damage was concentrated. Whether it marks a genuine rethink or a healthy pause after a record-setting run is the question hanging over Friday's tape.

Crypto Slips With Risk Appetite

Digital assets tracked the risk-off tone. Ether eased about 1.6 percent to near $1,827, giving back some of its recent leadership as the broad de-risking in tech spilled into the complex. Bitcoin held near $64,500, down roughly 0.8 percent but still defending the $64,000 area it has leaned on all week. The pullback is modest and orderly rather than a break of structure, and it mirrors the equity move more than any crypto-specific catalyst. With the macro calendar quiet, the complex is likely to keep taking its cue from how tech trades through Friday's session.

Gold Eases, Oil Holds $80 on Middle East Risk

Gold slipped to about $3,996, easing back below $4,000 as the metal failed to attract much safe-haven bid despite the equity wobble, with a firmer dollar and steadier rate expectations capping demand. WTI crude held near $80, swinging either side of the level as escalating Middle East tension kept a floor under prices; reports that Iran had asked Houthi forces to be ready to close the Red Sea oil route should US strikes target its infrastructure sustained a geopolitical premium. Brent traded a touch above $83. With commodities marking time and equities in focus, the crosscurrents leave the complex range-bound into the US open.

Scenarios to Watch

These are reference levels, not trade recommendations. For equities, Thursday's 7,533.77 close is the near-term marker: holding above it would suggest the chip-led pullback is stabilizing, while a break lower opens room toward the prior consolidation zone and puts more distance between price and the 7,575 record. The semiconductor index is the structural tell for the whole risk narrative after its 4.3 percent drop, and whether Friday's bank and insurer earnings can broaden leadership away from tech is the swing factor. In crypto, Bitcoin's $64,000 area remains the reference floor, and Ether's ability to hold $1,800 is the level to monitor. Oil stays hostage to the Red Sea headlines.

For the setup that led into today, see yesterday's analysis and our economic calendar for the full week ahead. Daily coverage continues on Market Insights.

ThriveInMarkets publishes market commentary for general information only and does not provide personal investment advice. Prices are live or overnight futures levels as labeled near 08:00 UTC; scheduled events and consensus figures can change, and levels cited are reference points, not instructions to buy or sell any asset.