AI Rally Doubts Shake Chip Stocks as S&P 500 Dips

The S&P 500 dropped as Micron Technology and other chipmakers faced skepticism about Wall Street's AI-focused rally. Samsung's earnings report disappointed investors, impacting both Asian and U.S. chip stocks. Meanwhile, news of Chinese startup DeepSeek developing its own AI chip fueled concerns about competition in the industry.

The S&P 500 experienced a decline on Tuesday, primarily affected by losses in Micron Technology and other chipmakers, as doubts grow about the sustainability of Wall Street's AI-driven rally. Despite a strong earnings report from Samsung Electronics, investors anticipated more from the chip giant's performance, leading to a selloff in both Asia and the United States.

Micron's stock fell over 5%, while SanDisk dropped almost 8%, contributing to a 4.4% fall in the PHLX chip index. This development has added to the ongoing wave of volatility seen in memory chipmakers and AI-related stocks amid concerns of overpriced shares following sharp gains from AI data center expansions.

Oil prices saw an uptick after reports of attacks near the Strait of Hormuz. Meanwhile, attention is building around SK Hynix's upcoming U.S. listing. Investors are also keenly awaiting the Federal Reserve's meeting minutes for insight into the strategies of new Chair Kevin Warsh.