Nasdaq 100 correction hits as chip and memory stocks slide
Chip and memory shares sold off worldwide, briefly pushing the Nasdaq-100 down 10% from its latest record as AI spending worries spread.
By Frankie Delgado · News Reporter
3 min read
A Nasdaq 100 correction briefly hit Wall Street on Tuesday as chip and memory stocks sold off around the world, NBC News reported, adding a fresh jolt to months of investor nerves around artificial intelligence spending.
The Nasdaq-100, which follows the 100 largest non-financial companies listed on the Nasdaq exchange, entered correction territory during the sell-off. A correction means an index has fallen at least 10% from its most recent record high.
The pressure was sharpest in names tied to computer storage, memory and chips. NBC News reported that Sandisk, Western Digital, Seagate, Micron and AMD each fell by around 10% in early trading.
Dell Technologies, which makes servers that use chips and memory from those companies, dropped 13%, according to NBC News. Intel was down 7%.
Why did the Nasdaq 100 enter correction territory?
The selling began overnight in Asian markets, with chip-related stocks in Korea, Japan and Taiwan hit first, according to NBC News. Samsung Electronics and SK Hynix, described by NBC News as the main makers of memory used in AI data centers, each fell more than 15%.
Kioxia, another computer storage company, dropped 18%.
The latest nerves followed a Monday report that a Chinese state-backed company had started mass production of domestic chip-making tools. NBC News said the report did not identify the company and that it could not verify the report.
Even so, the claim rippled through shares of established chip equipment makers. ASML, Canon and Nikon all fell sharply after the report, according to NBC News.
AI spending is still the market’s big question
The slide came just before earnings reports from Meta, Amazon, Microsoft and other companies pouring enormous sums into AI data centers. Those results could help set the market’s next move, especially for investors trying to judge whether AI spending is paying off.
Alphabet added to that debate last week. NBC News reported that its shares fell 7% after the company posted results and raised its projected capital spending to as much as $205 billion, most of it for building and expanding data centers.
Evercore technology analyst Mark Mahaney wrote last week that Alphabet’s higher spending could increase the chances of similar moves from AWS and Azure, NBC News reported. He also wrote that cloud demand appeared relentless.
JPMorgan said Friday that company spending tied to artificial intelligence is on track to approach about $870 billion by the end of 2026, up 77% from a year earlier, according to NBC News. Fabio Bassi, JPMorgan’s head of cross-asset strategy, said hyperscalers including Amazon, Meta, Microsoft and Alphabet account for about $750 billion of that total.
Apple moved in the other direction Tuesday. NBC News reported that the company, which is not spending hundreds of billions of dollars building its own data centers, rose about 1% and topped a $5 trillion market value for the first time. Apple has also overtaken Nvidia as the world’s largest public company.
Nvidia shares were slightly higher by mid-morning, according to NBC News.
The broader U.S. market held up better than chip stocks. The S&P 500 was higher in midday trading, while the Russell 2000 was slightly lower.
HSBC’s Max Kettner wrote Monday that positive earnings have helped support stocks, according to NBC News. He said average earnings surprises this quarter remained well above the post-pandemic average even without Alphabet’s results.
This story draws on original reporting from NBC News.