Chips on the Downturn: Market Volatility Shakes Tech Sector

Nasdaq futures fell as chipmakers faced selling pressure after a strong quarter. High valuations and AI spending concerns impacted the tech sector. Market volatility persisted amid inflation worries and interest rate anxiety. Micron, Intel, and other tech giants experienced sharp declines, reflecting broader economic challenges.

On Friday, Nasdaq futures descended more than 1% as chipmakers, experiencing a stellar quarter until recently, succumbed to renewed selling pressure. Investors scrutinized high valuations and the large investments in AI by companies, raising concerns across the technology sector.

Micron Technology's stock plummeted 6.4% in premarket trading after a more than 15% surge in the previous session. Meanwhile, industry giants like Intel and Advanced Micro Devices were down over 3.5%, as Nvidia plunged 1.7%. This downturn contributed to predictions of significant weekly losses for both the S&P 500 and Nasdaq, despite strong earnings reports from Micron. Compounding investor concerns, Apple raised prices on its iPads and MacBooks, citing increased memory and storage chip costs, which fueled inflation fears.

The tech sector jitters were highlighted by Apple's shares dropping 6.1% on Thursday, marking their steepest one-day decline in over a year. Although the stock edged up 0.9% pre-market, market analysts, like Peter Cardillo from Spartan Capital Securities, attributed the sell-off to expectations of higher interest rates. Concurrently, the U.S. reported a rise in inflation above 4% in May for the first time in three years, driven by higher energy prices amid Middle East tensions.