NEW YORK – The Nasdaq ended sharply lower on July 7, weighed down by losses in Micron Technology and other chipmakers due to mounting doubts about the sustainability of Wall Street’s AI-driven rally.
Chip stocks in Asia and the US dropped after memory chip giant Samsung Electronics’ blowout earnings report failed to satisfy investors with sky-high expectations.
Micron dropped 4.7 per cent and Sandisk lost 7.3 per cent. That helped send the PHLX chip index down 4.65 per cent, reducing its 2026 gain to about 74 per cent.
Adding to worries about high-flying chipmakers, Reuters reported that Chinese startup DeepSeek is developing its own AI chip, a push that could reduce its dependence on Nvidia and Huawei chips.
July 7’s chip selloff marked the latest bout of volatility among memory chipmakers and other AI-related stocks as investors worry that sharp gains related to the buildout of AI data centres may have left the shares too pricey.
“The story of today is the story of the last few weeks, and that’s rotation after the blistering run in the AI buildout, semis and memory. Expectations have gotten to be almost impossible to beat for these companies,” said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.
Another test of the appetite for chip stocks looms on July 10, when South Korean giant SK Hynix’s US listing starts trading on the Nasdaq.
Elon Musk’s SpaceX fell almost 7 per cent in its first day of trading as part of the Nasdaq 100 index, and after a wave of brokerages initiated coverage on the stock.
Eight of the 11 S&P 500 sector indexes declined, led lower by industrials, down 3.41 per cent, followed by a 2.45 per cent loss in materials.
The S&P 500 declined 0.45 per cent to end the session at 7,503.85 points.
The Nasdaq declined 1.16 per cent to 25,818.69 points, while the Dow Jones Industrial Average declined 0.25 per cent to 52,925.15 points. The Dow briefly hit a record high earlier in the session before losing ground.
Despite the S&P 500‘s decline, advancing issues in the index outnumbered falling ones by a 1.3-to-one ratio. Oil prices rose following reports of attacks on vessels near the Strait of Hormuz.
Fiserv climbed 1.8 per cent after media reports that the firm had held discussions with US banks including JPMorgan and Bank of America to sell its payments infrastructure business handling debit card transactions.
US Federal Reserve watchers will get another glimpse into how new chairman Kevin Warsh steers the central bank when it releases the minutes of its latest meeting on July 8, the first of his tenure.
Volume on US exchanges was relatively light, with 17.5 billion shares traded, compared with an average of 23.3 billion shares over the previous 20 sessions. REUTERS
