The Nasdaq Composite ended Tuesday’s trading session modestly lower, but the headline decline concealed a much deeper selloff in semiconductor stocks as Wall Street questioned whether the artificial intelligence investment boom can sustain its extraordinary pace.
The technology-heavy index fell 41.52 points, or 0.15%, to close at 27,204.38 on October 13. The S&P 500 slipped 0.02% to 7,805.45, while the Dow Jones Industrial Average lost 180.45 points to finish at 51,670.10.
Although the Nasdaq’s decline was relatively small, the Philadelphia Semiconductor Index recorded its fifth consecutive losing session, extending its five-day losses beyond 8%. Investors now face a critical test as Wednesday’s US inflation report approaches, with Treasury yields remaining elevated and questions surrounding AI infrastructure spending becoming increasingly difficult to ignore.
Nasdaq Stocks Slide as Micron and Applied Materials Extend Losses
Semiconductor stocks were among Tuesday’s biggest casualties, with Micron Technology declining 3.6% and Applied Materials falling almost 7%. The losses followed comments from Broadcom CEO Hock Tan, who questioned the enthusiasm surrounding certain artificial intelligence investments, comparing some activity in the sector to gambling.
His remarks arrived at a sensitive moment for chipmakers, whose valuations have benefited from enormous spending commitments by cloud computing companies and AI developers. Adding to the pressure, reports of advances in memory technology by Chinese semiconductor manufacturer CXMT raised concerns about intensifying competition in the global chip industry. The developments triggered selling across Asian semiconductor markets before weighing on US technology shares.
Broadcom itself managed a modest 0.7% gain, highlighting the increasingly selective nature of investor sentiment. For Micron, the latest decline reflects concerns that greater competition and uncertainty surrounding AI infrastructure spending could challenge the premium valuations investors have assigned to memory-chip manufacturers.
AI Stock Valuations Face a New Test on Wall Street
The semiconductor selloff comes after several years of extraordinary gains across AI-related stocks. Despite losing more than 8% over five sessions, the Philadelphia Semiconductor Index remains up more than 70% in 2026. That performance illustrates both the strength of the AI investment cycle and the scale of expectations already reflected in share prices.
Investors are increasingly focused on whether the companies purchasing advanced processors and memory chips can generate sufficient revenue from their AI investments. The concern is not necessarily that demand for AI computing has disappeared. Rather, investors are questioning how quickly that spending will translate into sustainable profits.
The broader US stock market remains heavily influenced by AI companies . The S&P 500 has gained approximately 14% this year, although more than 200 of its constituents are still trading below their levels at the beginning of 2026. That divergence suggests the market’s gains have become concentrated in a relatively small group of companies.
Apple Stock Hits Record High as Bank Earnings Disappoint
Not every major technology company participated in Tuesday’s decline. Apple shares reached an intraday record of $348.15 before closing at $341.27, up 0.1%, placing the company’s market capitalisation near $4.98 trillion. Meanwhile, earnings from major US banks produced mixed reactions.
Citigroup declined 5.6% despite exceeding profit expectations, while Goldman Sachs slipped 0.2%. Wells Fargo lost 3.1% after net interest income disappointed investors, and JPMorgan Chase fell 0.9% following a rare earnings miss. The contrasting performances suggest investors are becoming more demanding about corporate results as high borrowing costs and inflation continue to influence valuations.
US CPI Inflation Data Today Could Determine Nasdaq’s Next Move
The Nasdaq faces a crucial test on Wednesday, October 14, as investors await the release of the US September Consumer Price Index (CPI) report. The benchmark 10-year Treasury yield retreated toward 5.22% on Tuesday, down from last week’s multidecade high near 5.36%. However, borrowing costs remain elevated, putting pressure on technology stocks whose valuations depend heavily on future earnings growth.
A softer-than-expected CPI reading could strengthen expectations that the Federal Reserve will hold interest rates steady, potentially supporting a rebound in Nvidia , Micron and other technology stocks. Conversely, higher inflation could reinforce expectations of further Fed tightening, pushing Treasury yields higher and extending the Nasdaq’s recent semiconductor selloff.
Investors will also assess third-quarter corporate earnings, with analysts forecasting S&P 500 earnings growth of more than 30%, driven partly by AI-related companies. The combination of today’s inflation figures and upcoming earnings could determine whether the Nasdaq recovers toward 27,500 or retreats below 27,000.
Nasdaq Forecast: Will Tech Stocks Recover After US CPI?
The near-term Nasdaq outlook remains cautious as semiconductor weakness offsets resilience in several large technology companies. A softer US inflation report could encourage investors to return to AI-related stocks, particularly if Treasury yields continue retreating.
However, another inflation surprise or further losses in semiconductor shares could push the Nasdaq toward 27,000. The key question for investors is whether the recent chip selloff represents a temporary correction after substantial gains or the beginning of a broader reassessment of AI stock valuations.
Why is Micron stock falling?
Micron shares fell 3.6% on Tuesday as investors reacted to concerns about AI spending and reports of technological advances by Chinese memory-chip manufacturer CXMT.
How does US CPI affect the Nasdaq?
Higher inflation can increase expectations of Federal Reserve interest rate hikes and push Treasury yields upward, potentially weighing on technology stock valuations. Lower inflation may have the opposite effect.
How does US CPI affect the Nasdaq?
Higher inflation can increase expectations of Federal Reserve interest rate hikes and push Treasury yields upward, potentially weighing on technology stock valuations. Lower inflation may have the opposite effect.
The post Nasdaq Today: AI Chip Selloff Deepens as Micron Slides 3.6% Ahead of US CPI appeared first in UK on InvestingCube .
