U.S. stocks ended lower Tuesday as losses in Micron, Sandisk and other semiconductor names renewed concerns that investor expectations for AI-linked companies have climbed too far.
By yourNEWS Media Newsroom
Wall Street closed lower Tuesday as a selloff in chip stocks weighed on major indexes and deepened questions about whether the artificial intelligence rally can continue at its recent pace.
The Nasdaq Composite fell 1.19%, losing 310.06 points to finish at 25,811.10, according to preliminary data. The S&P 500 declined 34.07 points, or 0.45%, to close at 7,503.36. The Dow Jones Industrial Average dropped 140.30 points, or 0.26%, to end at 52,915.61 after touching an all-time high earlier in the trading session.
Losses in Micron Technology, Sandisk and other semiconductor stocks helped pull the PHLX chip index lower. The weakness followed declines in chip shares in Asia and the United States after Samsung Electronics posted strong earnings that still failed to satisfy investors’ elevated expectations.
The selling reflected a broader concern that shares tied to AI data centers, memory chips and semiconductor demand may have risen too quickly.
“The story of today is the story of the last few weeks — and that’s rotation after the blistering run in the AI buildout, semis and memory,” said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina. “Expectations have gotten to be almost impossible to beat for these companies.”
Reuters also reported that Chinese startup DeepSeek is developing its own AI chip, a move that could reduce its reliance on Nvidia and Huawei chips. The report added to pressure on chipmakers already facing scrutiny over valuations after sharp gains tied to AI infrastructure spending.
Investors are watching for another major test of demand for chip stocks Friday, when South Korean memory giant SK Hynix begins trading on the Nasdaq through its U.S. listing.
SpaceX also fell Tuesday in its first day trading as a member of the Nasdaq 100 index. The decline came after a wave of brokerages initiated coverage on the stock.
Oil prices moved higher following reports of attacks on vessels near the Strait of Hormuz, one of the world’s most important shipping routes.
Fiserv climbed after media reports said the company had discussed selling its payments infrastructure business with U.S. banks, including JPMorgan and Bank of America. The unit handles debit card transactions.
Federal Reserve watchers are also awaiting Wednesday’s release of minutes from the central bank’s latest meeting. The minutes will provide another look at how new Fed Chair Kevin Warsh is guiding policy during his first tenure leading the central bank.
Tuesday’s market action showed continued rotation away from some of the year’s strongest AI-linked winners as investors reassess whether the sector’s earnings can keep pace with expectations.