Tech selloff weighs on futures as Netflix and chip stocks slide

U.S. stock futures were sharply lower Friday, according to CNBC Investing Club director of portfolio analysis Jeff Marks, with technology and semiconductor stocks doing much of the damage. For everyday investors, that means the pressure was concentrated in the same AI-linked corner of the market that has driven a lot of recent attention.

Stock futures are contracts tied to major indexes that trade before the opening bell, giving investors an early read on where the market may open. Marks said the latest concern came from a Chinese artificial intelligence startup that claimed its new model can compete with products from OpenAI and Anthropic.

The chip trade showed the strain. Marks said the iShares Semiconductor ETF, ticker SOXX, was down nearly 3%, while the VanEck Semiconductor ETF, ticker SMH, was off more than 2%. Exchange-traded funds, or ETFs, are baskets of securities that trade like stocks, so those moves point to broad pressure across semiconductor names rather than one isolated company.

Netflix adds to the market drag

Netflix shares were down more than 11% after the streaming company reported second-quarter results that were in line with expectations but issued an outlook investors found disappointing, according to Marks. Analyst downgrades did not appear to be the main issue, but several firms cut their price targets.

A price target is an analyst’s estimate of where a stock could trade over a set period, usually 12 months. Goldman Sachs lowered its target on Netflix to $94 from $110, UBS cut its target to $115 from $130, JPMorgan moved to $85 from $118, and Morgan Stanley reduced its target to $83 from $90, according to Marks.

AI spending and data centers stay in focus

Apple received an upgrade to buy from hold at HSBC, which pointed to a cycle driven by Apple Intelligence and the arrival of new Siri AI features, Marks said. An upgrade means the analyst firm has become more positive on the stock relative to its prior rating.

Meta also remained tied to the AI infrastructure story. The Wall Street Journal reported that Meta hired a senior executive from Amazon Web Services to help build its data center infrastructure business. Marks said the move shows Meta is serious about making money from compute, a term that refers to the processing power needed to run cloud services and AI systems.

JPMorgan upgraded both 3M and Emerson Electric to buy from hold, citing stronger and less cyclical growth ahead, according to Marks. He said both companies are increasingly being viewed as beneficiaries of the data center buildout.

Other stock moves investors were watching

• SpaceX shares were under pressure after the Elon Musk-led company delayed its Starship mega rocket launch. Musk wrote on X that the next launch attempt would be “hopefully in a few days.”

• PPG was upgraded to buy from hold at Bank of America, which cited improving organic growth. Organic growth means sales growth from a company’s existing business, excluding acquisitions or currency effects. Bank of America also said raw material costs remain a risk but are more manageable, according to Marks.

• Intuitive Surgical shares fell after earnings. The company kept its outlook for da Vinci procedure growth at 13.5% to 15.5%, while Jefferies said investors had expected the company to raise that forecast, according to Marks.

• Abbott Laboratories received several price target increases after reporting what Marks described as a much improved quarter. Abbott management raised its full-year adjusted earnings guidance to $5.45 to $5.60 per share, compared with a prior range of $5.38 to $5.58 per share.

Marks also said the CNBC Investing Club reviewed all 34 stocks in its portfolio during a Thursday meeting, including names it would consider buying and areas where it would look to trim. The update came as investors weighed whether the pressure in tech and AI-linked shares was spreading into a broader market pullback.

This story draws on original reporting from CNBC.