U.S. stock futures declined sharply Friday after a round of selling in chip stocks across markets on the continent, Asia and the United States. The greatest damage was to the Nasdaq 100. The hard question investors are asking today is whether the artificial intelligence frenzy can continue to drive stock prices of the technology giants higher or if the current rally has gone too far.

Key Numbers to Know

Nasdaq 100 futures slid 1.42% to 28,810. Dow Jones futures fell 0.63% to 52,455. S&P 500 futures lost 0.77%, landing at 7,519.75. AIs and tech stocks that rely on semiconductors took the hardest hit, CNBC reports.

Chipmakers Take a Beating

Major chip makers saw the pain spread out. The iShares Semiconductor ETF sank 3.7%, while VanEck’s semiconductor fund dropped 3.4%. Applied Materials and Lam Research each dipped about 5%. Intel and KLA took a hit of over 4%. Arm and Micron both dipped 4%. Even Nvidia took a dip, it being the poster child of the AI trade.

It’s the second day of back-to-back losses. VanEck Semiconductor ETF, which had notched its third consecutive weekly gain, is now on the brink of its third consecutive weekly loss.

A Global Sell-Off

The selling was not only an American malady. Japan’s Nikkei 225 tumbled 4%. Australia’s ASX 200 slipped 0.5%. China’s CSI 300 fell 3.6%. In Europe, ASML dropped 4.4%, ASMI fell 5.4%, and STMicroelectronics sank 7%.

Geopolitics Adds Fuel to the Fire

The conflict between Iraq and the United States is exacerbating problems. The U.S. carried out a sixth straight night of strikes on Iranian targets. Iran’s response was to strike U.S. forces in Syria and Bahrain. 20% of the world’s oil flows through the Strait of Hormuz, where the battle is threatening to perturb oil traffic.

Adding to the gloom, Netflix shares fell nearly 10% after a weak revenue forecast. As earnings fears and global tension combine, these events indicate a retreat from riskier growth stocks from investors.

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