If Monday felt like a warning shot, Tuesday looked a lot more like the start of something. The Nasdaq dropped more than two percent, the chip names that have powered this entire rally got hammered for a second straight day, and the dollar climbed to a level we have not seen in twelve months. The AI story is not broken, but it is being questioned, and the price action says investors are listening.
The Rundown
- Chip stocks led a sharp Nasdaq selloff for a second consecutive session, with the AI capex narrative now openly debated.
- Memory and equipment names took the heaviest losses, while large-cap software held up better.
- The dollar pushed to its strongest level in a year on a more hawkish Fed path and weaker risk appetite.
- Tonight's Micron earnings will set the tone for the next leg of the AI and semiconductor trade.
The Chips Are Where the Pain Lives
The Dow Jones (DJI | ???0.09%) barely moved, but the Nasdaq (COMPX | ???2.21%) took a real hit, and the damage was concentrated in one place: semiconductors.
After months of names doubling, tripling, and in some cases pulling off moves I rarely see in a single year, investors finally hit the sell button, hard.
MICRON TECHNOLOGY INC (MU | ???13.18%) dropped thirteen percent ahead of its own earnings tonight. LAM RESEARCH CORP (LRCX | ???9.33%) lost over nine percent. BROADCOM INC (AVGO | ???3.06%) shed three.
Even the kings of the AI infrastructure trade did not escape: ADVANCED MICRO DEVICES (AMD | ???5.76%) fell almost six percent, and NVIDIA CORP (NVDA | ???4.13%) gave back another four.
MARVELL TECHNOLOGY INC (MRVL | ???9.36%), WESTERN DIGITAL CORP (WDC | ???8.45%) and SANDISK CORP (SNDK | ???13.64%) joined the rout.
I want to be honest about what I think is happening here. Some of this is straight profit-taking after an absurd run. But underneath that, a real debate has surfaced. The question is no longer whether the hyperscalers will spend hundreds of billions building AI capacity, they already are. The question is whether they will be able to monetize that capacity at decent prices once the buildout is finished.
If compute becomes a commodity, the operators of those datacenters will end up competing on price, not differentiation. That is a very different investment case than what has been priced into chip stocks over the past six months.
The Mag7 Split Down the Middle
The broader Magnificent Seven told a more nuanced story. TESLA INC (TSLA | ???5.79%) followed the chips lower, and ALPHABET INC-CL A (GOOGL | ???1.02%) leaked another percent after Monday's five-percent drop on the John Jumper exit news.
META PLATFORMS INC-CLASS A (META | ???0.29%) and APPLE INC (AAPL | ???0.91%) closed marginally lower, AMAZON.COM INC (AMZN | ???0.57%) edged slightly higher.
But MICROSOFT CORP (MSFT | ???1.80%) stood out as a clear winner - almost two percent up - and that is worth pausing on. When the AI hardware names are being sold, the AI software and platform names are still holding bid. That tells me the market is not abandoning AI as a theme; it is reassessing which part of the stack actually captures the value.
INTL BUSINESS MACHINES CORP (IBM | ???5.04%) was the other big positive surprise, gaining five percent after JPMorgan came in with a buy upgrade and a higher price target. A reminder that even on a brutal tape, single-name catalysts still work.
The Dollar, Iran, and Why Macro Matters Now
The macro picture quietly reinforced the equity move. The euro/dollar sank to 1.1380, the lowest in a year, as the market continues to digest a more hawkish Fed path. Higher US rates, weaker risk sentiment, and a recalibration of growth expectations are all pulling capital toward the dollar.
Oil took another small leg lower - WTI down almost one percent to $73.21 - on signs the Middle East tension may be easing. The US has temporarily relaxed sanctions on Iranian oil after Vice President Vance indicated Tehran will allow nuclear inspectors back as early as this week, though media reporting on the timeline is conflicting. Silver fell five percent in a single session, which is the kind of move that usually signals something larger is shifting in commodity positioning.
I keep coming back to a simple framework: a strong dollar plus higher real rates plus a wobbling tech narrative is a difficult mix for the kind of growth-skewed market we've had. Diversification has not mattered much for the last two years. It is starting to matter again.
FedEx, Carnival, and a Couple of Single-Name Stories Worth Tracking
FEDEX CORP (FDX | ???3.51%) reported fourth-quarter results after the close that came in better than expected on most fronts:
- revenue up thirteen percent to $25.01 billion,
- adjusted EPS of $6.31 versus a $5.96 consensus,
but the stock dropped another four percent after hours on top of the regular-session decline. The guidance was solid: eleven percent revenue growth and adjusted EPS between $16.90 and $18.10 for the new calendar year, with the freight unit now separately listed.
So why the sell reaction? CEO Subramaniam pointed to ongoing cost pressure and trade-policy headwinds, and in a market this jumpy, that kind of nuance gets punished. The setup, however, is not bad.
CARNIVAL CORP LTD (CCL | ???4.87%) gave back five percent on Q2 numbers, another reminder that consumer discretionary remains a sector where execution gets rewarded but any slip gets penalized fast.
BEST BUY CO INC (BBY | ???1.13%) softened on the news that CFO Matt Bilunas will leave at the end of July after seven years in the role. Routine, but markets dislike CFO transitions during uncertain periods.
One of the more painful single-name move of the day belonged to PRIMORIS SERVICES CORP (PRIM | ???21.59%), which collapsed twenty-one percent after cutting guidance on weaker renewable energy revenues. For anyone with exposure to clean-energy construction names, this is the kind of warning shot that demands attention.
Tonight Is About Micron
Everything that happens between now and the closing bell takes a backseat to one event: Micron's earnings after the close. The numbers themselves matter, but the guidance matters more. If MICRON TECHNOLOGY INC (MU | ???13.18%) signals continued tightness in the memory market and confident demand from AI customers, you could see a reflexive bounce across the entire chip complex tomorrow. If the company tempers expectations on pricing or demand visibility, this two-day selloff has a lot more room to run.
I am not in the business of predicting earnings reactions, but I am in the business of paying attention to the setup. And the setup tonight is unusually loaded.
Bottom Line
Two days of heavy selling in chips have shifted the conversation. The AI trade is not dead, but the easy money in the picks-and-shovels names has been made.
The Fed is leaning hawkish, the dollar is at one-year highs, and the macro is doing some of the heavy lifting on the downside.
Micron tonight is the next inflection point. Until then, I'm watching the tape, keeping diversification top of mind, and resisting the temptation to either panic out of quality names or chase a snapback that may not come.
ChartMill Market Desk - Kristoff
With regard to the stocks discussed in the article above; the author owns individual shares in Nvidia & Microsoft.
This daily update is prepared by ChartMill for informational purposes only and does not constitute investment advice. Always do your own due diligence before making investment decisions.
Read full article here »
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Chip Selloff Deepens as AI Doubts Bleed Into a Second Session
If Monday felt like a warning shot, Tuesday looked a lot more like the start of something. The Nasdaq dropped more than two percent, the chip names that have powered this entire rally got hammered for a second straight day, and the dollar climbed to a level we have not seen in twelve months. The AI story is not broken, but it is being questioned, and the price action says investors are listening.
The Rundown
The Chips Are Where the Pain Lives
The Dow Jones (DJI | ???0.09%) barely moved, but the Nasdaq (COMPX | ???2.21%) took a real hit, and the damage was concentrated in one place: semiconductors.
After months of names doubling, tripling, and in some cases pulling off moves I rarely see in a single year, investors finally hit the sell button, hard.
MICRON TECHNOLOGY INC (MU | ???13.18%) dropped thirteen percent ahead of its own earnings tonight. LAM RESEARCH CORP (LRCX | ???9.33%) lost over nine percent. BROADCOM INC (AVGO | ???3.06%) shed three.
Even the kings of the AI infrastructure trade did not escape: ADVANCED MICRO DEVICES (AMD | ???5.76%) fell almost six percent, and NVIDIA CORP (NVDA | ???4.13%) gave back another four.
MARVELL TECHNOLOGY INC (MRVL | ???9.36%), WESTERN DIGITAL CORP (WDC | ???8.45%) and SANDISK CORP (SNDK | ???13.64%) joined the rout.
I want to be honest about what I think is happening here. Some of this is straight profit-taking after an absurd run. But underneath that, a real debate has surfaced. The question is no longer whether the hyperscalers will spend hundreds of billions building AI capacity, they already are. The question is whether they will be able to monetize that capacity at decent prices once the buildout is finished.
If compute becomes a commodity, the operators of those datacenters will end up competing on price, not differentiation. That is a very different investment case than what has been priced into chip stocks over the past six months.
The Mag7 Split Down the Middle
The broader Magnificent Seven told a more nuanced story. TESLA INC (TSLA | ???5.79%) followed the chips lower, and ALPHABET INC-CL A (GOOGL | ???1.02%) leaked another percent after Monday's five-percent drop on the John Jumper exit news.
META PLATFORMS INC-CLASS A (META | ???0.29%) and APPLE INC (AAPL | ???0.91%) closed marginally lower, AMAZON.COM INC (AMZN | ???0.57%) edged slightly higher.
But MICROSOFT CORP (MSFT | ???1.80%) stood out as a clear winner - almost two percent up - and that is worth pausing on. When the AI hardware names are being sold, the AI software and platform names are still holding bid. That tells me the market is not abandoning AI as a theme; it is reassessing which part of the stack actually captures the value.
INTL BUSINESS MACHINES CORP (IBM | ???5.04%) was the other big positive surprise, gaining five percent after JPMorgan came in with a buy upgrade and a higher price target. A reminder that even on a brutal tape, single-name catalysts still work.
The Dollar, Iran, and Why Macro Matters Now
The macro picture quietly reinforced the equity move. The euro/dollar sank to 1.1380, the lowest in a year, as the market continues to digest a more hawkish Fed path. Higher US rates, weaker risk sentiment, and a recalibration of growth expectations are all pulling capital toward the dollar.
Oil took another small leg lower - WTI down almost one percent to $73.21 - on signs the Middle East tension may be easing. The US has temporarily relaxed sanctions on Iranian oil after Vice President Vance indicated Tehran will allow nuclear inspectors back as early as this week, though media reporting on the timeline is conflicting. Silver fell five percent in a single session, which is the kind of move that usually signals something larger is shifting in commodity positioning.
I keep coming back to a simple framework: a strong dollar plus higher real rates plus a wobbling tech narrative is a difficult mix for the kind of growth-skewed market we've had. Diversification has not mattered much for the last two years. It is starting to matter again.
FedEx, Carnival, and a Couple of Single-Name Stories Worth Tracking
FEDEX CORP (FDX | ???3.51%) reported fourth-quarter results after the close that came in better than expected on most fronts:
but the stock dropped another four percent after hours on top of the regular-session decline. The guidance was solid: eleven percent revenue growth and adjusted EPS between $16.90 and $18.10 for the new calendar year, with the freight unit now separately listed.
So why the sell reaction? CEO Subramaniam pointed to ongoing cost pressure and trade-policy headwinds, and in a market this jumpy, that kind of nuance gets punished. The setup, however, is not bad.
CARNIVAL CORP LTD (CCL | ???4.87%) gave back five percent on Q2 numbers, another reminder that consumer discretionary remains a sector where execution gets rewarded but any slip gets penalized fast.
BEST BUY CO INC (BBY | ???1.13%) softened on the news that CFO Matt Bilunas will leave at the end of July after seven years in the role. Routine, but markets dislike CFO transitions during uncertain periods.
One of the more painful single-name move of the day belonged to PRIMORIS SERVICES CORP (PRIM | ???21.59%), which collapsed twenty-one percent after cutting guidance on weaker renewable energy revenues. For anyone with exposure to clean-energy construction names, this is the kind of warning shot that demands attention.
Tonight Is About Micron
Everything that happens between now and the closing bell takes a backseat to one event: Micron's earnings after the close. The numbers themselves matter, but the guidance matters more. If MICRON TECHNOLOGY INC (MU | ???13.18%) signals continued tightness in the memory market and confident demand from AI customers, you could see a reflexive bounce across the entire chip complex tomorrow. If the company tempers expectations on pricing or demand visibility, this two-day selloff has a lot more room to run.
I am not in the business of predicting earnings reactions, but I am in the business of paying attention to the setup. And the setup tonight is unusually loaded.
Bottom Line
Two days of heavy selling in chips have shifted the conversation. The AI trade is not dead, but the easy money in the picks-and-shovels names has been made.
The Fed is leaning hawkish, the dollar is at one-year highs, and the macro is doing some of the heavy lifting on the downside.
Micron tonight is the next inflection point. Until then, I'm watching the tape, keeping diversification top of mind, and resisting the temptation to either panic out of quality names or chase a snapback that may not come.
ChartMill Market Desk - Kristoff
With regard to the stocks discussed in the article above; the author owns individual shares in Nvidia & Microsoft.
This daily update is prepared by ChartMill for informational purposes only and does not constitute investment advice. Always do your own due diligence before making investment decisions.
Read full article here »