Wall Street ended lower on Tuesday (Wednesday AEST), with the Nasdaq leading losses as renewed concerns over the sustainability of the artificial intelligence (AI)-driven rally weighed heavily on semiconductor stocks.
The Dow Jones Industrial Average fell 130.8 points, or 0.3%, to 52,925.2 after briefly touching a fresh record high earlier in the session before reversing course. The S&P 500 lost 33.6 points, or 0.5%, to finish at 7,503.9, while the Nasdaq Composite dropped 302.5 points or 1.2% to 25,818.7.
Chipmakers across the United States and Asia came under pressure after memory chip giant Samsung Electronics delivered stronger-than-expected earnings, though the results failed to meet investors' elevated expectations.
Micron Technology fell 4.7%, while Sandisk tumbled 7.3%.
Adding to the sector's weakness, Reuters reported that Chinese AI startup DeepSeek is developing its own artificial intelligence chip, a move that could reduce its reliance on Nvidia and Huawei hardware.
The sell-off marked the latest bout of volatility for memory chipmakers and other AI-linked companies, with investors increasingly questioning whether the sector's rapid gains, fuelled by massive investment in AI data centres, have pushed valuations too high.
Investor appetite for semiconductor stocks will face another test on Friday when South Korean memory chipmaker SK Hynix begins trading its U.S. listing on the Nasdaq.
Elsewhere, Elon Musk's SpaceX fell 6.8% in its first day of trading as a Nasdaq-100 constituent, while also coming under pressure following a wave of brokerage coverage initiations.
Fiserv rose 1.8% after reports the payments company had held discussions with major U.S. banks, including JPMorgan and Bank of America, about selling its debit card payments infrastructure business.
Investors will also turn their attention to the U.S. Federal Reserve on Wednesday (Thursday AEST), when minutes from the central bank's latest policy meeting - the first under Chair Kevin Warsh - are released, offering further insight into the Fed's policy outlook.
On the bond markets, U.S. Treasury yields edged higher, with both the 10-year and two-year yields rising 1.8 basis points to 4.551% and 4.187%, respectively.
