Applied Materials (AMAT) shares dropped 5.6% on Friday. A broad sell-off across the semiconductor sector accompanied the decline.
Chinese startup Moonshot AI triggered the downturn by unveiling its Kimi K3 model. This efficient artificial intelligence model renewed investor concerns regarding future infrastructure spending.
Markets fear that improved AI efficiency will lead major tech companies to reduce capital expenditure. Such a reduction directly threatens demand for the advanced chip-making equipment supplied by Applied Materials. This development prompted a wider reassessment of high valuations throughout the industry.