The S&P 500 slipped on Tuesday as losses in Micron and other chipmakers dragged the benchmark lower, driven by doubts about the staying power of Wall Street's AI-fueled rally. Micron fell over 5% and SanDisk almost 8%, pushing the PHLX chip index down 4.4%.
Chipmakers pulled the S&P 500 down on Tuesday as investors questioned whether Wall Street's AI-driven rally can hold. The S&P 500 slipped 0.27% to 7,516.76 points, weighed down by memory chipmakers even as most of the index's sectors advanced.
Chip selloff spreads from Samsung
Chip stocks fell across Asia and the United States after memory giant Samsung Electronics' earnings report failed to satisfy investors holding sky-high expectations. Micron dropped over 5% and SanDisk fell almost 8%, helping send the PHLX chip index down 4.4% and trimming its 2026 gain to 74%.
Adding to the pressure, Reuters reported that Chinese startup DeepSeek is developing its own AI chip, a move that could reduce its dependence on Nvidia and Huawei. The selloff marks the latest bout of volatility among memory chipmakers as investors worry that gains tied to the AI data-center buildout may have left the shares too pricey.
Breadth stays positive as energy leads
Despite the decline, most of the benchmark's 11 sector indexes rose, led by a 1.6% gain in energy. Advancing issues outnumbered falling ones within the S&P 500 by a 1.4-to-one ratio. Zachary Hill of Horizon Investments described the move as a rotation after "the blistering run in the AI buildout, semis and memory".
The Nasdaq declined 0.64% to 25,954.35 points, while the Dow Jones Industrial Average slipped 0.27% to 52,915.17 points after hitting an all-time high earlier in the session.
What traders watch next
Another test of appetite for chip stocks looms on Friday, when SK Hynix's U.S. listing starts trading on the Nasdaq. Traders also await Wednesday's release of the Federal Reserve minutes, the first under new Chair Kevin Warsh.
Source: StreetInsider (Reuters)
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