The Nasdaq ended sharply lower on Tuesday, weighed down by losses in Micron Technology and other chipmakers due to mounting doubts about the sustainability of Wall Street's AI-driven rally.

Chip stocks in Asia and the United States dropped after memory chip giant Samsung Electronics' blowout earnings report failed to satisfy investors with sky-high expectations.

Micron dropped 4.7 percent and Sandisk lost 7.3 percent.

Tuesday's chip selloff marked the latest bout of volatility among memory chipmakers and other AI-related stocks as investors worry that sharp gains related to the buildout of AI data centres may have left the shares too pricey.

"The story of today is the story of the last few weeks, and that's rotation after the blistering run in the AI buildout, semis and memory. Expectations have gotten to be almost impossible to beat for these companies," said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.

Another test of the appetite for chip stocks looms on Friday, when South Korean giant SK Hynix's US listing starts trading on the Nasdaq.

Elon Musk's SpaceX fell almost 7 percent in its first day of trading as part of the Nasdaq 100 index, and after a wave of brokerages initiated coverage on the stock.

Eight of the 11 S&P 500 sector indexes declined, led lower by industrials, down 3.41percent, followed by a 2.45 percent loss in materials.

The S&P 500 fell 0.5 percent to end the session at 7,503 points. The Nasdaq declined 1.2 percent to 25,818 points, while the Dow Jones Industrial Average declined 0.3 percent to 52,925 points.

Fiserv climbed 1.8 percent after media reports that the firm had held discussions with US banks including JPMorgan and Bank of America to sell its payments infrastructure business handling debit card transactions. (Reuters)



Edited by Cecil Wong