US technology stocks are poised for a significant decline on Tuesday, following a selloff among Korean chipmakers which has raised concerns about the long-term viability of the artificial intelligence-driven market rally. Contracts on the Nasdaq 100 index fell 2.6% as of 5 a.m. in New York, while S&P 500 futures dropped 1.4%. In Europe, the technology sub-index of the Stoxx 600 also registered a notable decrease, falling 3.1%.
This downturn reflects increasing investor apprehension regarding whether the substantial investments being made by tech giants into AI infrastructure will ultimately generate sufficient returns to justify the considerable spending. The sector-wide weakness is indicative of broader concerns over rising capital expenditure and the uncertain timeline for meaningful monetization of AI products.
The sentiment from Asian markets echoes these concerns, with MSCI's gauge of regional equities declining over 2% and South Korea's Kospi index plunging more than 6%. This comes after an eight-day winning streak for Asian tech names was snapped, with investors rotating out of some of the year's best-performing technology shares. Attention is now turning to memory chipmaker Micron Technology's quarterly results, expected on Wednesday, which will serve as a critical test for the sustainability of AI spending and the broader tech rally.
