US stocks closed lower after semiconductor companies experienced significant declines, driven by investor sentiment shifting away from artificial intelligence.The tech-heavy Nasdaq 100 Index dropped 1.5% during the week, marking its worst performance in nearly a month.Meta led the Magnificent Seven group lower, while the Philadelphia Semiconductor Index fell 1.6%, extending its decline from a June record to 20%, meeting the bear market threshold.The downturn follows the announcement of an AI model by a Chinese startup, prompting investors to reassess their positions in chipmakers.

Analysts suggest the sell-off reflects growing concerns about the sustainability of AI-driven growth and the sector's vulnerability to macroeconomic shifts.

The broader market implications highlight the interconnectedness of technology and financial markets, with semiconductor stocks serving as a barometer for investor confidence in innovation-driven industries.

This development underscores the challenges faced by companies reliant on AI adoption, as market participants weigh the long-term viability of current investment strategies.