* Futures down: Dow 0.7%, S&P 500 0.9%, Nasdaq 1.9%

* Netflix ( NFLX ) falls as earnings forecast disappoints Wall Street

* Intuitive Surgical ( ISRG ) falls on insurance coverage concerns

* University of Michigan consumer sentiment survey due at 10

am ET

(Updates to before market open)

By Ragini Mathur and Avinash P

July 17 (Reuters) - Wall Street's main indexes were set to

open lower on Friday, with a reassessment of this year's

AI-fueled rally by investors deepening a selloff in chip stocks

and a weak forecast from Netflix ( NFLX ) adding to the pressure.

After a blistering run that lifted Wall Street's main

indexes to record highs, investors have started to retreat from

crowded semiconductor trades as worries over the scale of

AI-related spending resurfaced.

Chip stocks were broadly weaker, extending the previous

session's losses, with heavyweight Nvidia ( NVDA ) down 2.5% in

premarket trading.

Applied Materials ( AMAT ) and Lam Research ( LRCX ) led

losses in the sector, falling about 4% each. The iShares

Semiconductor ETF declined 3%.

The Philadelphia SE Semiconductor index hit a nearly

two-month low on Thursday and was set for its worst week since

March 2025. The gauge has shed more than 19% from its late June

record.

Strong results from TSMC, the world's top advanced

AI chipmaker, and ASML, the leading supplier of

high-end chipmaking equipment, did little to ease concerns over

the durability of the chip-stock rally.

"This is morphing from just a chip selloff into something

far broader. That is particularly obvious in indices like the

Nasdaq, which has come so far, so fast in such a short space of

time," said Chris Beauchamp, chief market analyst at IG.

"People will understandably be looking to hold on to the

gains they might have made since the end of March."

The tech-heavy Nasdaq has risen about 11% so far

this year.

Netflix ( NFLX ) weighed on sentiment after forecasting

third-quarter revenue and earnings below Wall Street estimates.

Shares of the streaming giant were down 11.3% before the bell.

The CBOE Volatility Index, Wall Street's fear gauge,

rose 1.36 points to 18.09 - the highest in more than a week.

At 8:33 a.m. ET, Dow E-minis were down 342 points,

or 0.65%, and S&P 500 E-minis were down 68.5 points, or

0.9%. Nasdaq 100 E-minis were down 554 points, or 1.9%.

Thursday's chip-led losses already set a weaker tone,

leaving the main indexes on track for weekly declines despite an

upbeat start to second-quarter earnings from major banks and

benign inflation data earlier this week.

Investors will also watch the University of Michigan's

consumer sentiment survey and industrial production data, due

later in the day, which cap a busy week of economic reports.

Geopolitical risks also loomed large. The United States

struck bridges and an airport in Iran and Tehran responded by

hitting a power and desalination plant in Kuwait.

Meanwhile, President Donald Trump's fresh accusations that

China meddled in U.S. elections risked complicating a fragile

truce with Chinese leader Xi Jinping, just two months before a

planned Washington summit.

Among other premarket movers, Intuitive Surgical ( ISRG ) shares slid

nearly 10% after the medical device maker kept its da Vinci

procedure-growth forecast unchanged and warned insurance-plan

changes may be delaying patient care.

(Reporting by Ragini Mathur and Avinash P in Bengaluru; Editing

by Joyjeet Das)