AI-linked stocks staged a recovery on Tuesday after opening lower, as a pullback in crude oil prices helped improve market sentiment and investors assessed the latest concerns surrounding the sustainability of the artificial intelligence trade.
Micron Technology, Intel and SanDisk were among the chip stocks that recovered during the session, while Advanced Micro Devices (AMD), Seagate Technology and the VanEck Semiconductor ETF (SMH) also moved higher. SanDisk, which had fallen as much as 0.3% intraday, was trading around 1% higher later in the session, while the Nasdaq Composite was up 0.6%.
Micron Technology rose 1.17% to $915.50, while Intel gained 0.44% to $92.40. AMD advanced 1.36% to $545.16, and SMH, which tracks major semiconductor companies, climbed 0.33% to $550.57 after rising nearly 1%. CoreWeave gained 3.68% to $63.48, recovering after opening lower. Seagate Technology also advanced around 2%.
The recovery followed renewed selling pressure at the start of the session, highlighting the volatility in technology stocks as investors weigh the growth potential of AI against rising investment costs and questions over future demand. Sentiment towards technology stocks has been under pressure amid concerns about whether the heavy investment in AI infrastructure will generate returns sufficient to justify the spending.
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The latest concerns followed the public market debut of South Korean AI firm Elice, whose shares tumbled more than 30% overnight. The decline added to weakness across Asian technology markets, with South Korea's Kospi closing in bear market territory.
Technology stocks also weighed on European equity markets during the morning session.
Investors have increasingly focused on the debt used to finance AI infrastructure, alongside uncertainty over how quickly demand for computing capacity and related services will translate into sustainable earnings.
The concerns contributed to last week's broad market sell-off, although Monday's gains offered some relief. The S&P 500 rose 0.4% in regular trading, while the Nasdaq Composite advanced more than 1%. Nvidia gained 1.4%, Tesla jumped 3.8% and Alphabet added about 1%.
Tuesday's rebound in semiconductor stocks suggests some investors returned to the sector after the recent declines. However, the recovery does not necessarily mean concerns about AI spending and valuations have been resolved.
Oil Prices Retreat, Easing Pressure On Equities
A pullback in crude oil prices also supported sentiment during Tuesday's session. US West Texas Intermediate crude futures fell more than 1% to around $102 per barrel, while Brent crude futures declined more than 2% to approximately $106 per barrel.
Oil prices have been volatile amid concerns about Iranian attacks on shipping and the risk of disruptions to energy flows through the Strait of Hormuz.
Lower crude prices can ease concerns about inflation and the pressure that higher fuel and transportation costs place on businesses and consumers. A sustained decline could also reduce worries that elevated energy prices will complicate the outlook for interest rates.
However, geopolitical risks remain a key variable for both energy markets and equities.
Netflix, SpaceX Earnings In Focus
Investors are also preparing for results from two closely watched names in the technology and media space, with Netflix and SpaceX scheduled to report after the market close.
Netflix is expected to post earnings growth of around 40% for the third quarter, according to LSEG estimates. Investors will also focus on its outlook for user engagement and business performance amid senior management changes and a substantial round of job cuts.
SpaceX's report will also be closely watched given investor interest in the broader technology and space sectors.
The results could offer further clues about corporate growth expectations and how investors are valuing businesses operating in fast-changing technology markets.
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