This post was originally published on this site.
Major US stock indices are closing lower on the day but well off the lows.
What is not really benefiting from the rebound are the AI and semiconductor stocks which remained are under heavy selling pressure, and significantly outpaced the “more modest” declines in the broader technology market.
Looking at some of the market’s leading AI, semiconductor and data-center names are being hit considerably harder(levels at around 3:35 ET).
-
Coherent: -11.70%
-
Astera Labs: -10.78%
-
Lumentum: -9.88%
-
Arm Holdings: -9.01%
-
Lam Research: -7.72%
-
SK Hynix: -7.67%
-
Credo Technology: -7.48%
-
ASML: -7.10%
-
Marvell Technology: -6.74%
-
Monolithic Power Systems: -6.59%
-
CoreWeave: -6.41%
-
Applied Materials: -6.62%
-
KLA Corp.: -6.37%
-
Nebius: -5.05%
-
Micron: -4.94%
What changed over the weekend?
The selling follows warnings from leading figures at Anthropic, OpenAI and xAI about the risks created by the rapid development of increasingly powerful AI models. The concerns included
- cybersecurity,
- biological threats,
- economic disruption and the
- possibility that development is moving faster than the industry’s ability to control it.
Those comments raised the prospect of a more measured pace of AI development, increased government oversight and additional spending on safety and governance.
President Trump pushed back against slowing AI development, arguing that it would benefit China, and calling it a HOAX (in capital letters) Nevertheless, the warnings were enough to challenge the market’s aggressive assumptions about uninterrupted AI growth.
Why chip and infrastructure stocks are taking the biggest hit
The companies falling the most are generally positioned closest to the massive AI infrastructure buildout. They supply memory, networking components, optical equipment, semiconductor manufacturing tools, chip designs or data-center computing capacity.
Their valuations depend heavily on several assumptions:
-
AI companies will continue developing larger and more powerful models.
-
Hyperscalers will maintain aggressive capital-spending plans.
-
Demand for chips, memory, networking and data-center capacity will remain extremely strong.
-
Governments will allow development to continue without significant delays or restrictions.
Now, the weekend warnings do not mean that AI spending has suddenly stopped. There has been no confirmed reduction in major capital-expenditure plans, but I would not expect it (or want to be the first). However, they introduce another risk into valuations that already price in years of rapid growth.
For investors, the key question is whether this is simply a sentiment-driven correction after an extended run higher or the beginning of a reassessment of future AI spending. Watch the actual capital-spending plans from Microsoft, Meta, Amazon, Alphabet and the leading AI laboratories.(MSFT is up 2.32%, Meta is up 2.87%, Alphabet is up 3.08%). If those plans remain intact, buyers may eventually view the decline as an opportunity. If spending is delayed or reduced, today’s selling could represent something more significant.
The market’s message today is that investors are not abandoning technology broadly. They are specifically reducing exposure to the stocks most dependent on the continuation of the AI infrastructure boom.
Looking at the AI bellweather Nvidia, it’s share price is down but not part of the worst performers. Its shares are down -2.85% on the day but is trading above and below its 100 day MA at $211.36 after toying with all-time highs jon Friday September 4 at $236.54.
The closing levels for the US major indices.
The final closing levels for the major indices today are showing:
- Dow Industrial average fell -152.02 points or -0.29%
- S&P index -37.01 point or -0.48% at 7619.96
- Nasdaq index fell -146.62 points or -0.56% at 26186.41.
For the Nasdaq composite index, it stalled the fall at the 100 day MA,but also stalled the rally between the 100 and 200 hour moving averages at 26299.22 and 26384.40. The high reached between those two levels at 26329.98 as traders kept the sellers in play. The battle is now between the hourly moving averages above and the 100 day MA below.
This article was written by Greg Michalowski at investinglive.com.
