Nasdaq Falls 1.6% as AI Spending Doubts Hit Chips; Netflix Slumps After Hours

A selloff in chipmakers dragged Wall Street lower Thursday as investors questioned whether massive artificial-intelligence investments can justify lofty valuations. The Nasdaq 100 dropped 1.6%, and futures pointed to further weakness Friday, with Asian markets set to open lower.

The pressure extended after the close, where Netflix fell more than 8% in extended trading after forecasting a second straight quarter of slowing sales growth. The tech weakness adds to a rotation underway since June, with health care, financials, and industrials outperforming while technology lags.

Investors turn next to a heavy Friday data slate — June housing starts, building permits, industrial production, and preliminary July consumer sentiment — along with earnings from Travelers, Truist Financial, and Fifth Third Bancorp for clues on whether the rotation out of growth names continues.