Memory Chip Selloff Sparks Broader Tech Rout; Markets Question AI Spending Returns
A sharp decline in memory chip stocks like Micron, Marvell, and SanDisk triggered a broader technology selloff that dragged major indices lower. Wall Street is increasingly demanding evidence that massive corporate AI spending will generate profitable returns.
The Market Decline
The S&P 500 and the Nasdaq Composite were lower on Tuesday as a tech sell-off that began during the prior session picked up steam overnight, with global markets in Asia routed as memory chip-related shares tumbled. The broad market index fell 1.44% to 7,365.46, while the tech-heavy Nasdaq slid 2.21% to close at 25,587.04. The Dow Jones Industrial Average ended down 45.87 points, or 0.09%, at 51,666.84.
Memory Chip Collapse
Micron Technology dropped more than 10%, putting it on track for its worst day since June 5, leading a broad selloff in tech. Marvell Technology also shed 8%, while Sandisk lost 11%. Micron's earnings on June 24 stands out as a key catalyst highlighting the importance of the memory complex in the broader AI narrative.
Global Impact
Japan's Nikkei 225 declined 3.55% to close the trading day at 69,788.38, breaking eight sessions of gains. The Topix lost 2.56% to close at 3,990.38. In Australia, the S&P/ASX 200 lost 0.33% to 8,787. Hong Kong's Hang Seng Index fell 1.82% to close at 23,336.28, while mainland China's CSI 300 was down 2.77% to 4,919.39.
Investor Sentiment Shift
Nvidia, Alphabet and other technology stocks fell as Wall Street shifted from rewarding AI spending to demanding evidence that it will produce outsized returns. Investors moved into more defensive areas of the market on Tuesday amid a sell-off in memory chip-related stocks. Shares of Walmart gained more than 2%, as did shares of Johnson & Johnson. Additionally, Coca-Cola shares were 0.6% higher.
Bright Spots
Accenture rose nearly 2%, bucking the broader market downturn, after it increased its share repurchase program by $2 billion to more than $7 billion.