Nasdaq drops over 2% as global chip selloff accelerates

US equities fell sharply on Tuesday as a global selloff in semiconductor and artificial intelligence linked stocks deepened, pulling the Nasdaq Composite down more than 2% and erasing over $1 trillion in tech market value in recent sessions.

Market overview

Index	Close (approx.)	Move & % Change	Comments
Nasdaq 100	approx. 19,000	-1,000 pts (down over 3%)	Tech heavy gauge hit by chip and AI stocks.
Nasdaq Composite	approx. 25,800	-2.2%	Extended prior session underperformance in big tech.
S&P 500	approx. 7,396	-1.4%	Broad based weakness, opened 1.54% lower.
Dow Jones Industrial Average	approx. 51,515	flat to -0.4%	Recovered about 350 pts from opening lows.
DJ Total Stock Market Index	approx. 73,386	-0.99%	Signalled wider US equity decline.

Note: figures are approximate; final exchange data not available at time of publication.

• US stocks opened lower as tech selling from Asia carried into Wall Street.
• Nasdaq 100 underperformed as investors exited high valuation AI names.
• Dow Jones fared better due to lower mega tech weight and rotation to old economy stocks.
• Philadelphia Semiconductor Index fell nearly 8%, all 30 constituents ended lower.
• Tech market capitalisation losses topped $1 trillion in the recent selloff.

Key movers: US technology and chips

Top Gainers	Sector	Notable Factor
IBM	Technology	Rose about 4% after brokerage upgrade and OpenAI cybersecurity partnership.
Edgewell Personal Care	Consumer	Gained around 9% after rejecting a takeover offer.

Top Losers	Sector	Notable Factor
Micron Technology	Semiconductors	Dropped 11 to 13% ahead of quarterly results.
SanDisk	Memory & storage	Fell about 9 to 13% in chip led selloff.
Qualcomm	Semiconductors	Declined around 6% as chip stocks weakened.
Intel	Semiconductors	Lost 6 to over 7% in overnight trade.
AMD	Semiconductors	Fell about 6% alongside peers.
Nvidia	Semiconductors	Dropped around 2 to 8% as AI rally unwound.
Alphabet	Technology	Extended prior losses, down about 0.8 to 2%.
Tesla	Automobiles / Tech	Declined around 2% in early trade.
Primoris Services	Infrastructure	Slumped 35% after cutting full year earnings guidance.

• Micron shares had surged over 300% year to date before the pullback.
• Alphabet had fallen 5% in the previous session after senior AI engineers departed.
• Microsoft and Amazon gained 1.8% and 0.6%, respectively, bucking the tech slide.
• Meta Platforms ended just below the flat line.
• SpaceX slipped another 1% pre market after a prior 16.4% drop, trading just above $156.

Global cues and sectoral action

Market/Asset	Movement	Notes
Kospi (South Korea)	down 10%	Hit circuit breaker, led by semiconductor heavyweights.
Nikkei 225 (Japan)	down 3.6%	Fell from record territory amid tech weakness.
S&P/ASX 200 (Australia)	down 0.3%	Tracked global risk off mood.
CAC 40 (France)	down 0.6%	European equities followed Wall Street lower.
DAX (Germany)	down 1%	Pressure from global tech and growth concerns.
FTSE 100 (UK)	down 0.5%	Declined in line with broader risk aversion.
Brent crude	about -0.3% to $77.7	Eased after US waiver on Iranian oil sanctions.
US crude (WTI)	about -3% to $73.8	Fell on expectations of higher Iranian supply.

Note: figures are approximate; final exchange data not available at time of publication.

• Kospi drop followed reports SK Hynix slowed advanced AI chip expansion to boost DRAM output.
• SK Hynix and Samsung Electronics each fell 12.5%, despite large year to date gains.
• Nifty 50 and Hang Seng Index also ended with steep losses, mirroring US tech weakness.
• MSCI kept South Korea in its Emerging Markets category, citing unresolved structural issues.

• “Any headline that can be read as ‘AI memory demand might be plateauing’ gets sold hard right now” Amanda Lyons, head of research, Energy Group Capital.

Macro drivers and rates outlook

Statistic	Value/Change	Context
US 10 year Treasury yield	about 4.49%	Up from 4.43% a week earlier, reflects higher rate expectations.
US inflation (CPI, May est.)	4.1% vs 3.8%	Data due Thursday, key for Fed outlook.
Fed hike probability (Dec)	about 88%	Up from 57 to 61%, per CME FedWatch Tool.

Note: figures are approximate; final exchange data not available at time of publication.

• Traders priced a higher chance of at least one US rate hike by year end.
• Market focus shifted to PCE inflation, the Federal Reserve’s preferred gauge.
• Chicago Fed officials signalled attention on whether inflation stays elevated or eases.
• Higher yields weighed on growth and technology stocks reliant on future earnings.

AI and chip cycle concerns

• Investors questioned whether AI related capex can justify elevated semiconductor valuations.
• Reports of SK Hynix reallocating capacity reinforced worries on AI data centre demand.
• Domestic broker commentary highlighted sensitivity to earnings expectations after strong gains.
• The recent AI led rally in global equities showed signs of reversing.

Technical outlook: US indices and volatility

• Nasdaq Composite fell more than 1.3% in the prior session, then over 2% on Tuesday.
• S&P 500 opened 1.54% lower, indicating persistent selling pressure.
• Futures for Nasdaq 100 and S&P 500 had earlier signalled declines up to 2.8% and 1.4%.
• Traders watched Micron earnings for cues on AI memory demand and sector direction.

Oil and geopolitical backdrop

• US waived some sanctions on Iranian oil exports for 60 days, aiding supply expectations.
• An interim US Iran agreement eased restrictions on Iranian ports and exports.
• Certain Iranian assets were set for unfreezing, though timelines remained unclear.
• Crude prices stayed below $78 per barrel despite Middle East tensions.

FAQ

Q: Why did US chip stocks fall so sharply?

• Heavy profit taking followed reports SK Hynix slowed advanced AI chip expansion, stoking fears AI memory demand may plateau and exposing stretched valuations across US semiconductor names.

Q: How did non chip big tech perform during the selloff?

• Alphabet extended losses, while Microsoft, Amazon, and Meta were relatively resilient, with Microsoft and Amazon posting gains and Meta closing near flat.

Q: What upcoming data could influence the next move in US tech stocks?

• Investors are watching Micron earnings and US PCE inflation data, which will shape expectations for AI demand and the Federal Reserve’s rate path, both critical for growth stock valuations.

Frequently Asked Questions

Why did US chip stocks fall so sharply?

Heavy profit taking followed reports that SK Hynix slowed advanced AI chip expansion, raising concerns that AI memory demand may be plateauing and exposing stretched valuations across US semiconductor names.

How did non chip big tech perform during the selloff?

Alphabet extended losses, while Microsoft, Amazon and Meta were relatively resilient, with Microsoft and Amazon gaining and Meta closing near flat.

What upcoming data could influence the next move in US tech stocks?

Investors are focused on Micron’s earnings and US PCE inflation data, which will guide expectations for AI demand and the Federal Reserve’s rate path, both key for growth stock valuations.