Nasdaq Plunges 2.4% as Global Semiconductor Sell-Off Sparks AI Valuation Concerns; S&P 500 Drops 1.5%

Mumbai, June 23: U.S. stock markets opened sharply lower on Tuesday as a technology-driven rout intensified, with the Nasdaq Composite plunging 2.4% within the first hour of trading. The broader S&P 500 declined 1.5%, while the Dow Jones Industrial Average shed 363 points (0.7%), as a global sell-off in semiconductor and memory chip stocks raised fresh doubts about the sustainability of artificial intelligence-related valuations.

The sell-off, which began during Monday’s session, accelerated overnight after Asian markets experienced significant losses, with South Korea’s Kospi index crashing 10%, triggering a circuit breaker. The weakness has now spread to European markets, with the pan-European Stoxx 600 falling 1%, led by a 3% decline in technology shares.

Nasdaq 100 Futures Plummet 2.8% as Global Chip Sell-Off Intensifies

The technology-heavy Nasdaq 100 futures tumbled 2.8% in pre-market trading, while S&P 500 futures dropped 1.4%, indicating sustained selling pressure throughout Tuesday’s session. The Nasdaq Composite, which had already shed 1.3% on Monday, extended its losses to 2.4% at the opening bell.

The trigger for Tuesday’s rout originated in Asia, where SK Hynix, South Korea’s memory chip leader, plunged more than 12% following reports that the company was slowing production of advanced AI chips to increase commodity DRAM capacity. This move reinforced growing investor concerns that the pace of AI-related data centre spending may not justify current market valuations.

Also Read: How to Invest in the US Stocks From India?

Samsung Electronics, another memory chip giant, also declined more than 12%, dragging the Kospi Composite Index down 10%—one of its sharpest intraday declines in recent years. Japan’s Nikkei 225 fell 3.55%, breaking an eight-session winning streak, while Hong Kong’s Hang Seng Index dropped 1.8%.

Semiconductor Stocks Bear Brunt of Sell-Off as Micron Plunges 11% Ahead of Earnings

The semiconductor sector emerged as the weakest link in the U.S. market, with chip stocks experiencing substantial declines across the board. Micron Technology shares fell 11% in early trading, extending pre-market losses, ahead of its earnings report scheduled for Wednesday after the closing bell. The stock had previously surged more than 300% since the start of the year.

Sandisk Corporation tumbled 12.3%, while Western Digital declined 9.2%. Components manufacturer Seagate Technology shed more than 8%. Among other semiconductor names, Lam Research dropped 8.1%, Applied Materials fell 7.6%, and KLA Corporation declined 7.5% Intel pulled back 2.9%, Advanced Micro Devices fell 4.9%, and Qualcomm dropped 6.3% following reports that the company is in advanced talks to acquire AI software infrastructure company Modular in a deal valued at approximately $4 billion. NVIDIA Corporation declined 2.5%, while Marvell Technology fell 6%.

The VanEck Semiconductor ETF declined 6%, while the State Street Technology Select Sector SPDR ETF dropped 3% in early trading.

SpaceX Faces Fourth Consecutive Losing Session as Valuation Slides Below Debut Price

SpaceX shares continued their downward trajectory, trading 4% lower and on pace for a fourth consecutive losing session. The stock fell below its initial public offering price of $150, bringing the company’s market capitalisation below $2 trillion.

The Elon Musk-led space and artificial intelligence company had opened at $160.95 on 12 June, its first day of trading, subsequently reaching a closing high of $201.80. However, shares have since declined more than 26%, erasing nearly $400 billion in market capitalisation during a single session.

Analysts attributed the decline to broad de-risking in high-momentum growth names rather than company-specific news, as investors reconsidered debt-financed AI investments and elevated valuations across the technology sector.

Alphabet Extends Losses Following Key AI Talent Departures

Alphabet shares fell nearly 2% in early trading, adding to Monday’s 5% decline—the stock’s worst performance since May 2025. The selling pressure came amid concerns about the company’s AI talent pool following high-profile departures from its research divisions.

On Wednesday, Noam Shazeer, Google’s vice president of engineering and co-lead of its Gemini AI models, announced his departure to OpenAI. Subsequently, on Friday, John Jumper, DeepMind vice president and engineering fellow, announced he was leaving for Anthropic. U.S. markets were closed on Friday for a public holiday.

The talent exodus has raised questions about Alphabet’s ability to maintain its competitive position in the rapidly evolving AI landscape, contributing to the broader technology sector sell-off.

Oracle Announces 21,000 Job Cuts as Technology Sector Restructures

Oracle Corporation shares fell 2% in early trading after the software giant disclosed in a regulatory filing that it had eliminated 21,000 positions, representing almost 13% of its global workforce, over the past year.

The job reductions come amid broader restructuring efforts within the technology sector as companies reassess their workforce requirements in response to changing market dynamics and cost pressures. Oracle, headquartered in Austin, Texas, is a leading provider of enterprise software, cloud computing solutions, and database management systems.

IBM Defies Tech Sell-Off With 5.3% Gain Following JPMorgan Upgrade

International Business Machines Corporation emerged as a bright spot in Tuesday’s market, rising 5.3% in early trading following an upgrade to overweight from analysts at JPMorgan.

The banking firm cited improving fundamentals, noting that IBM’s software division continues to drive better recurring revenue, margins, profitability, and cash flow. The upgrade helped IBM buck the broader technology sector sell-off, highlighting the divergence between legacy technology companies and high-growth AI and semiconductor names.

IBM, headquartered in Armonk, New York, is a multinational technology corporation specialising in computer hardware, middleware, and software, with a significant focus on hybrid cloud and AI solutions.

Federal Reserve Rate Hike Expectations Rise to 88% as Markets Price Hawkish Stance

Expectations for further monetary policy tightening increased significantly, with traders now pricing in an 88% probability of a Federal Reserve rate hike by December 2026, up from 61% before the Fed meeting last week, according to the CME FedWatch Tool.

The shift in expectations reflects a more hawkish interpretation of policies under Fed Chair Kevin Warsh, with markets anticipating that borrowing costs will remain higher for longer. Chicago Fed President Austan Goolsbee indicated that with the labour market remaining stable, policymakers are focused on determining whether inflation will remain elevated or gradually ease as the effects of tariffs fade and tensions in the Middle East subside.

The prospect of higher interest rates poses a particular challenge for technology and growth companies, whose valuations depend heavily on future earnings and discounted cash flows.

VIX Index Climbs Above 20 as Investor Risk Aversion Intensifies

Investor nervousness increased noticeably as the VIX Index, often referred to as Wall Street’s fear gauge, rose above 20, reaching its highest level in approximately one week.

The elevation in the VIX reflects growing defensive positioning among market participants amid uncertainty surrounding technology valuations and the monetary policy outlook. Market participants are adopting more cautious stances as they navigate the intersection of AI spending concerns, semiconductor industry weakness, and shifting Federal Reserve expectations.

Tesla Faces Renewed Scrutiny Despite European Sales Recovery

Tesla shares declined 3.9% in early trading, extending losses amid broader technology sector weakness and reports of renewed scrutiny of its driver-assistance systems.

Despite the negative price action, Tesla registrations in Europe reportedly doubled compared with a year ago, indicating resilient demand in the region. However, concerns over electric vehicle demand in Europe, ongoing margin pressure from price competition in China, and regulatory oversight of its autonomous driving features have weighed on investor sentiment.

Primoris Services Plunges 35% After Full-Year Guidance Cut

Primoris Services Corporation shares plummeted 30.1% in early trading after the construction and engineering company cut its full-year earnings guidance.

The significant decline in the stock price reflects investor disappointment with the revised outlook, although the specific reasons for the guidance reduction were not detailed in early trading reports. The magnitude of the decline underscores the market’s sensitivity to earnings expectations in the current environment.

FedEx Earnings in Focus Following Freight Business Separation

Investors are awaiting results from FedEx Corporation, scheduled for release after Tuesday’s closing bell. Market expectations are for earnings per share of approximately $5.90 on revenue of nearly $24 billion.

The results represent the first earnings release following the separation of its freight business, providing investors with an opportunity to assess the company’s operational performance and strategic direction. FedEx, headquartered in Memphis, Tennessee, is a multinational delivery services company specialising in transportation, e-commerce, and business solutions.

Oil Prices Stabilise Following US-Iran Progress; Crude Futures Decline

Energy markets showed relative calm amid signs of progress in U.S.–Iran relations, with oil prices holding relatively steady. Brent crude futures declined 0.3% toward $77.70 per barrel, while U.S. West Texas Intermediate crude futures dropped 0.3% to approximately $74 per barrel.

President Donald Trump stated in a social media post that the Strait of Hormuz would remain open, with no further naval blockade. The United States reportedly issued a 60-day licence allowing Iran to sell oil in international markets as part of an interim agreement that includes easing restrictions on Iranian ports and unfreezing certain Iranian assets.

Reduced fears about disruptions in the Strait of Hormuz—responsible for approximately one-fifth of global oil shipments—have somewhat eased inflation concerns, although the implementation timeline for the agreement remains unclear.

The technology sector’s decline reflects investor sentiment more than weakening fundamentals. AI spending worries and semiconductor weakness persist, while defensive stocks remain steady. Upcoming inflation data, Federal Reserve comments, and progress in U.S.-Iran talks could influence market direction, energy prices, and inflation expectations.

Source

• https://www.nasdaq.com/

• spglobal.com/spdji/en/indices/equity/sp-500/

• https://www.dowjones.com/