Nasdaq futures fall as AI chip concerns weigh on Wall Street earnings outlook

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Nasdaq futures, AI chip worries

Highlights

Nasdaq futures drop as Nvidia falls 1.1%, Micron 4.6%, Applied Materials 3.5%, TSMC 2.6%, and SK Hynix 4% ahead of key tech earnings.
Philadelphia SE Semiconductor Index slides over 20% from its June peak as investor skepticism grows regarding sustained AI chip demand and infrastructure spending.
S&P 500 E-minis dip 0.09% and Nasdaq 100 E-minis fall 0.69%, as traders anticipate the Fed's rate decision and oil prices decline 2.8% to a one-week low.

Chip stocks slide before key results

As reported by Reuters, Nasdaq futures fall on Tuesday as investors pull back from AI chip stocks before earnings from major U.S. technology companies. In premarket trading, Nvidia falls 1.1%, Micron drops 4.6% and Applied Materials loses 3.5%, while U.S.-listed shares of TSMC and SK Hynix decline 2.6% and 4%, respectively.

Market volatility has increased this month as investors question whether continued heavy spending on AI infrastructure can sustain the strong gains seen in semiconductor shares in the previous quarter. Roundhill's Memory Exchange Traded Fund drops 6.6% and remains below its 50-day moving average for the past two weeks, while the Philadelphia SE Semiconductor Index is down more than 20% from its record high reached in June.

Investors are also watching results due later this week from Amazon.com, Meta, Apple and Microsoft for signs that investments worth several hundred billion dollars are producing returns. Their updates are expected to offer a broader read on demand for chips and related AI infrastructure, even as shares of the four companies are marginally higher in premarket trading on Tuesday.

Fed decision and global risks shape sentiment

Broader U.S. futures point to a mixed open, with Dow E-minis up 100 points, or 0.19%, S&P 500 E-minis down 6.5 points, or 0.09%, and Nasdaq 100 E-minis down 194.5 points, or 0.69% at 04:27 a.m. ET. The moves come as investors also weigh concerns that companies such as Alphabet and Tesla are running short of cash to fund their ambitions, while cheaper Chinese AI models add pressure across the semiconductor sector.

The Federal Reserve is due to announce its interest rate decision on Wednesday at the end of a two-day meeting. Traders see only a 37.4% chance of a rate hike this week, according to LSEG data, but still expect borrowing costs could rise by at least 25 basis points by year-end.

Oil prices fall 2.8% to a one-week low, offering some relief to policymakers and investors as a fragile ceasefire between the U.S. and Iran holds despite drone attack reports from Saudi Arabia, Jordan and Iraq. That easing in energy prices helps offset part of the market anxiety surrounding rates, geopolitics and technology earnings.

Our earlier report on the Fed decision and the week’s heavy earnings calendar explained why traders were bracing for a pivotal stretch for U.S. equities. We noted that updates from Microsoft, Meta, Apple and Amazon—especially on AI capital spending and demand signals—could set the tone for broader risk appetite alongside shifting rate-hike expectations.

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