Cris Tolomia
2 min read
Tech stocks swooned on Tuesday, with the Nasdaq Composite opening down more than 2% as a selloff that originated in U.S. markets the day before swept through Asia and Europe, battering memory chip stocks worldwide and coming back to the U.S.
Losses extended to other major indexes, with the S&P 500 off 1.6% and the Dow Jones Industrial Average shedding 363 points, or 0.7%. Major U.S. market indexes recovered some of their early losses shortly after markets opened, with the Nasdaq later trading down 1.2% and the Dow closer to the break-even line.
In South Korea, the Kospi — up 95% on the year heading into the session — tumbled close to 10%, with memory chipmaker SK Hynix finishing more than 12% lower. Tokyo's Nikkei 225 retreated 3.55%, snapping a run of eight consecutive advances.
Among individual chip stocks in the U.S., Micron Technology gave up 11% at the open. Seagate Technology and Intel each retreated more than 7%, while Sandisk lost nearly 10%. Advanced Micro Devices shed more than 7% and Qualcomm dropped more than 6%. The VanEck Semiconductor ETF slid 6% on the day.
Worries over departing AI talent at Google continued to weigh on its shares, which lost close to 2% after a 5% slide the prior session. Broader unease about the tech sector has been building, as questions over AI firms' escalating capital expenditures and prospective Fed rate hikes have eroded confidence in the recent rally. Samsung Electronics shares also declined in Seoul.
Selling pressure also hit Europe, where the pan-European Stoxx 600 closed 1% lower and its technology subindex led all sectors with a 3% decline. Two of the steepest losers on the index were Dutch companies: semiconductor equipment firm ASMI and chipmaker STMicroelectronics, which each fell in excess of 6%.
SpaceX shares were off more than 2%, headed for a fourth consecutive day of declines. Nvidia, Oracle, and Tesla all opened lower as well.
Defensive stocks offered a counterpoint to the broader decline, with Walmart advancing 2% and Johnson & Johnson rising close to 3% as investors sought shelter in steadier names.
Crowded positioning among AI-linked stocks is amplifying the moves, according to Andrew Slimmon, a senior portfolio manager at Morgan Stanley Investment Management, who appeared on CNBC's "Squawk Box."
"The AI beneficiaries are the sell-off, and I don't think they're expensive, but they're crowded," Slimmon said. "It's captured kind-of the zeitgeist of the momentum traders and when that happens, you're going to have sharp sell offs like we're having. I'd argue it's healthy."
On the earnings calendar, Cerebras — which recently went public — is due to post results after Tuesday's close, with Micron following on Wednesday evening.