Monday brought one of the sharpest premarket selloffs in the AI-linked trade in months, as investors absorbed weekend warnings from artificial intelligence executives on top of already-rising oil prices and an approaching Fed decision.
Nasdaq-100 futures fell about 1.6 percent, led by losses in chip stocks including Nvidia, while Dow futures slipped about 0.2 percent and S&P 500 futures declined roughly 0.7 percent. In Asia, shares of memory chip makers SK Hynix and Samsung also dropped. Among individual names, Marvell and SK Hynix each fell around 7 percent in premarket trading, while CoreWeave, SanDisk, Intel and AMD each fell around 6 percent, and Micron and Super Micro Computer each declined roughly 5 percent. The CBOE Volatility Index, known as the VIX and often called Wall Street's fear gauge, jumped more than 12 percent, while gold slipped and crude oil futures rose more than 3 percent.
The immediate catalyst was a weekend essay from Anthropic CEO Dario Amodei calling for the AI industry to slow the pace of developing more advanced models to address safety concerns, a call that OpenAI CEO Sam Altman publicly echoed. Bloomberg reported that market watchers expect the warnings to weigh on chipmaker and supply-chain stocks in the near term, but see limited long-term impact given that demand for chips, energy and computing power continues to outstrip supply.
Rising oil prices, driven by the ongoing Middle East conflict and a shuttered Saudi pipeline, and this week's Federal Reserve meeting, where markets are now pricing a possible rate hike rather than a cut, added further pressure to an already jittery market. Taken together, the moves reflect a market trying to reprice both the speed of AI investment and the cost of borrowing and energy at the same time.
Traders will be watching whether chip and AI infrastructure stocks stabilize as the week progresses, and how Wednesday's Fed decision interacts with a market already on edge from the AI selloff and oil-driven inflation worries.
Why did chip stocks fall so much?
Investors reacted to weekend warnings from AI industry leaders calling for a slower pace of AI development, which raised questions about near-term demand for chips and AI infrastructure.
Is this expected to be a lasting decline?
According to Bloomberg's reporting, market watchers expect the pressure on chip and supply-chain stocks to be more of a near-term effect, with limited long-term impact given continued strong demand for computing infrastructure.