Tech shares weakened on Tuesday as renewed fears about an AI-driven bubble dampened market momentum. Conversation about a potential bubble has been prominent in recent months, but so far it has not inflicted a lasting blow on stock prices.
Market moves at a glance
- The tech-heavy Nasdaq Composite Index fell about 2.5% shortly after the opening bell.
- The broader S&P 500 index was down roughly 1%.
Memory and data-storage names hit hardest
Memory chip and data-storage stocks were among the worst performers early in the session. Part of the pressure came after South Korea's KOSPI index dropped about 10% overnight; that index is heavily influenced by memory-chip makers Samsung Electronics and SK Hynix.
In U.S. trading early on:
- Memory-chip maker Micron plunged more than 10%.
- Storage device maker SanDisk fell more than 12%.
- Hard-disk-drive makers Seagate Technology and Western Digital were each down roughly 8%.
Context: AI infrastructure and pricing
Producers of memory chips and storage devices have been major beneficiaries of the AI infrastructure boom. The surge in demand for AI capacity has driven unprecedented demand and rising prices for components that were previously treated as commodity inputs in devices such as laptops and cellphones.
Notable listing: SpaceX
Shares of SpaceX — which went public less than two weeks ago — briefly traded below their $150 opening price on Tuesday. While widely known for rockets, SpaceX has also become viewed by some investors as an AI play, with hopes for lucrative opportunities tied to orbital data-centers.
Bottom line
At this stage it is too early to determine whether the sell-off represents a deeper market shakeout or merely a temporary rebalancing.
