AI hype seems to be cooling as tech stocks dramatically plunge

US tech stocks plunged as investors grew concerned that massive AI spending may fail to deliver tangible returns, with the Nasdaq down 1.25% and the Philadelphia SE Semiconductor index falling 1.8%—its worst week since March after shedding over 20% from its late-June record high. Apple briefly surpassed Nvidia as the world's most valuable company as chip stocks extended weakness, while China's Moonshot unveiled Kimi K3, a 2.8 trillion-parameter open-weight AI model that intensified competitive fears among investors.

Why it matters: All three major indexes were poised for weekly losses as Netflix dropped 9% on below-estimate Q3 forecasts, and the CBOE Volatility Index rose to 18.03, the highest level in over a week.