Nasdaq futures declined on Tuesday, reflecting a cautious tone across global markets surrounding artificial intelligence chip stocks. Investors are weighing concerns about the level of corporate spending on AI technology and the growing competitive threat from China, all ahead of a critical stretch of earnings reports from some of the largest companies in the United States.
Several major chipmakers saw notable premarket losses. Nvidia dropped 1.1%, Micron fell 4.6%, and Applied Materials lost 3.5%. U.S.-listed shares of Taiwan’s TSMC and South Korea’s SK Hynix also declined, falling 2.6% and 4%, respectively.
Markets have grown increasingly volatile this month as investors question whether the massive corporate investment in AI infrastructure — particularly semiconductors — is truly justified. Those same chip stocks had powered strong gains in the previous quarter.
Roundhill’s Memory Exchange Traded Fund dropped 6.6% on Tuesday and has been trading below its 50-day moving average for the past two weeks, signaling weak short-term momentum. The Philadelphia SE Semiconductor Index has now fallen more than 20% from its all-time high reached in June.
Adding to investor anxiety, signs have emerged that some of Wall Street’s biggest names — including Alphabet and Tesla — may be running low on the cash needed to fuel their ambitious AI plans. Meanwhile, China continues to develop less expensive AI models and expand its foothold in the global semiconductor market.
Later this week, Amazon.com, Meta, Apple, and Microsoft are all scheduled to report earnings. Investors will be closely watching to see whether the hundreds of billions of dollars these companies have poured into AI are beginning to generate returns. The results are also expected to shed light on demand for chips and other AI-related infrastructure. Shares of all four companies were slightly higher in premarket trading Tuesday.
As of 4:27 a.m. ET, Dow E-minis were up 100 points, or 0.19%. S&P 500 E-minis were down 6.5 points, or 0.09%, while Nasdaq 100 E-minis declined 194.5 points, or 0.69%.
The Federal Reserve is set to wrap up its two-day meeting Wednesday and announce its decision on interest rates. According to data compiled by LSEG, traders currently see only a 37.4% chance of a rate increase this week, though many expect borrowing costs to climb by at least 25 basis points before the year is out.
On a more positive note for both the Fed and investors, oil prices fell 2.8% to a one-week low. A fragile ceasefire between the U.S. and Iran appeared to be holding, despite reports of drone attacks in Saudi Arabia, Jordan, and Iraq. U.S. President Donald Trump stated that the United States was engaged in “good talks” with Iran and suggested there was a possibility of reaching a deal to end the conflict.
