TLDR
- Nasdaq 100 futures dropped nearly 1% Tuesday as a global chip sell-off continued
- South Korea’s Kospi index fell over 10%, with Samsung and SK Hynix down 13–14%
- Nvidia is reportedly exploring a $250 billion funding backstop for OpenAI, raising circular financing concerns
- Chinese competition in AI and chip manufacturing is weighing on US tech sentiment
- The Federal Reserve begins its two-day policy meeting Tuesday, with a rate decision due Wednesday
Tech stocks faced fresh pressure Tuesday as a deepening sell-off in semiconductor shares rattled markets. Concerns about AI financing and Chinese chip competition drove the losses.
Nasdaq 100 futures fell nearly 1% before the bell. S&P 500 futures dropped 0.1%. Dow Jones Industrial Average futures bucked the trend, rising around 0.6% as investors focused on earnings.
Chip Stocks Lead the Decline
The sell-off started Monday after reports that a Chinese state-backed company is mass-producing chip-manufacturing machines. That news spooked investors and spread into Asian markets overnight.
South Korea’s Kospi index tumbled more than 10% on Tuesday. Memory chipmakers Samsung Electronics and SK Hynix fell 13% and 14% respectively, among the hardest-hit stocks globally.
Deutsche Bank analyst Jim Reid said: “Renewed worries over AI investment spending, and competition from cheaper Chinese companies, have triggered another selloff in global semiconductor stocks.”
Nvidia shares were down nearly 5% in premarket trading. The company is reportedly in talks to provide a $250 billion funding backstop for OpenAI, which has deepened concerns about how tightly the two companies are linked financially.
That type of arrangement, where a company helps finance a major customer, has raised questions about circular financing risks. Traders are growing cautious about whether the AI investment boom can deliver real returns.
Fed Meeting Adds to Market Uncertainty
The Federal Reserve kicked off its two-day policy meeting Tuesday. A rate decision is expected Wednesday.
Markets lean toward the Fed holding rates steady, but there is no strong consensus. A rate hike remains possible, making this one of the harder policy calls in recent memory.
Oil prices continued to fall Tuesday after the US and Iran paused active hostilities. President Trump said diplomatic talks were underway, adding some relief to energy markets.
On the earnings front, Coca-Cola raised its full-year outlook after beating second quarter estimates. Visa, Boeing, Ford, and PayPal are also reporting this week.
SK Hynix results were due around 8 p.m. ET Tuesday, closely watched for clues on where the memory chip market is heading as AI uncertainty grows.
The broader picture is one of a market weighing strong corporate earnings against real concerns about AI trade sustainability and rising competition from China.
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