Wall Street was set for a split open on Tuesday as renewed anxiety over the cost of the artificial-intelligence boom pushed chip stocks lower and left the Nasdaq trailing the broader market.
US stock futures were mixed, with S&P 500 futures edging 0.10% lower and Nasdaq 100 futures falling 0.83%, while Dow futures gained 145 points, or 0.28%.
The sell-off spread from Asia after heavy losses in South Korean and Taiwanese technology shares.
Investors are asking whether hundreds of billions of dollars committed to data centres and semiconductors can generate returns quickly enough to justify elevated valuations ahead of Big Tech earnings.
5 things to know before Wall Street opens
1. Micron leads another chip retreat
Micron fell 4.6% in premarket trading, Applied Materials lost 3.5% and Nvidia slipped 1.1%.
US-listed shares of SK Hynix and TSMC dropped 4% and 2.6%, respectively.
The declines followed a bruising Asian session in which South Korea’s Kospi sank 10.8%, with SK Hynix down 14.7%, as selling spread across memory and AI-linked shares.
2. China competition becomes a valuation risk
The latest anxiety is not only about spending.
Reports that China has begun mass production of domestically developed deep-ultraviolet chipmaking equipment added to concerns that cheaper models and local semiconductor capacity could erode the pricing power of established suppliers.
Some analysts viewed the sell-off as excessive, arguing that leading global chipmakers retain formidable technology and scale advantages.
Still, China’s progress is forcing investors to reconsider how long today’s margins and market shares can be sustained.
3. Big Tech must defend the AI bill
Microsoft and Meta report after Wednesday’s close, followed by Amazon and Apple on Thursday.
The market will focus on cloud growth, capital expenditure and evidence that AI products are generating revenue fast enough to offset the cost of data centres, chips and power.
The four stocks were only marginally higher before the bell, suggesting investors were reluctant to take large positions before the results.
4. Semiconductor damage is no longer superficial
The Philadelphia Semiconductor Index has fallen more than 20% from its June record, meeting the usual definition of a bear market.
Roundhill’s memory-chip exchange-traded fund slid 6.6% and has remained below its 50-day moving average for two weeks.
That technical damage raises the risk that rebounds will attract sellers until earnings reset expectations for demand and AI infrastructure spending.
5. The Fed and cheaper oil offer a counterweight
The Federal Reserve began its two-day meeting on Tuesday and will announce its decision at 2 pm ET on Wednesday.
Markets assigned a 37.4% probability to an immediate rate increase, while still expecting at least 25 basis points of tightening by year-end.
Oil fell 2.8% to a one-week low as the US-Iran pause held, easing some inflation pressure.
The relief remains fragile, however, after fresh drone incidents across the region kept threats to energy infrastructure in focus.
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