US equities slide as chip rout fuels AI valuation fears
Memory chipmakers SK Hynix and Samsung Electronics led a global tech downturn, dragging the Nasdaq down 1.6% and raising doubts about artificial intelligence valuations. Meanwhile, progress in US-Iran talks eased oil prices, and the Department of Energy announced $15 billion in loans for advanced reactors.
US equities declined on Tuesday, with the Nasdaq Composite falling approximately 1.6% and the S&P 500 dropping 1%, driven by a sell-off in memory chipmakers that raised concerns about artificial intelligence valuations. South Korean giants SK Hynix and Samsung Electronics each lost over 12%, dragging the Kospi index down 10%. Conversely, signs of progress in US-Iran peace negotiations, including a 60-day waiver on oil sanctions, led to a roughly 1% drop in crude oil prices. The US Department of Energy announced over $15 billion in loans to accelerate advanced nuclear reactor deployment, while Walmart agreed to purchase nuclear power from Constellation Energy.
The technology sector faced significant pressure as investors reassessed the sustainability of AI-driven valuations. Micron Technology shares dropped by as much as 12% following a record close on Monday, adding to the rout that also saw Nvidia slip nearly 3% and Alphabet fall almost 1%. The sell-off extended across global markets, with the Nikkei 225 and Hang Seng indexes declining 3.6% and 1.8% respectively, reflecting a broad risk-off sentiment among traders.
In the energy sector, the US Department of Energy committed $17.5 billion in loans to support the procurement of long-lead items for 10 advanced reactors. The financing will support up to five loans, each covering two reactors at project sites jointly owned by Westinghouse and partnering utilities. Westinghouse and its partners must commit $500 million in equity per project to access the funds, aiming to accelerate deployment timelines by up to three years.
Corporate activity in the nuclear space expanded as Walmart signed an agreement to purchase 176 megawatts of power from Constellation Energy’s Dresden nuclear plant. The deal, structured over two 15-year terms beginning in 2029 and 2030, will supply energy to a high-tech perishable distribution center in Illinois. Constellation Energy, the largest US supplier of nuclear energy, saw its shares drop roughly 3.1% in premarket trading, while Walmart gained approximately 1%.
Diplomatic developments provided a counterbalance to market volatility. A 60-day waiver on oil sanctions issued by the US, coupled with satellite data showing increased traffic through the Strait of Hormuz, contributed to a decline in Brent and WTI crude futures. President Trump stated that the strait would remain open, although discrepancies emerged regarding the extent of nuclear inspection concessions agreed to by Iran. Meanwhile, preliminary S&P Global data showed US business activity outperforming expectations, with the manufacturing PMI reaching a four-year high of 55.7.
