US semiconductor stocks came under heavy selling pressure in pre-market trading on Tuesday, with Micron Technology, Intel, Marvell Technology and several other AI-linked chip names falling sharply as investors turned cautious amid a broader technology sell-off, rising bond yields and profit booking.
Micron, Marvell and Intel declined as much as 5% in pre-market trading, while Nvidia slipped more than 2%. Western Digital fell over 6%, while SanDisk also dropped around 6%. Marvell and Seagate Technology were both down more than 5%.
The selling pressure extended beyond semiconductor stocks, with Oracle falling around 3.5% and Palantir edging 0.5% lower. Coherent declined nearly 7% as investors appeared to book profits following the optical technology provider's recent rally.
Nasdaq-100 futures were down around 1.2%, signalling a weak start for the technology-heavy index.
A key trigger for the sell-off was a sharp rise in US Treasury yields, which has made high-growth technology and semiconductor stocks less attractive at current valuations. The 30-year US Treasury yield climbed nearly 2 basis points to around 5.329%, trading close to levels not seen in nearly two decades. The yield had touched its highest level since June 2007 on Monday.
Higher bond yields typically put pressure on growth and technology stocks because they increase the discount rate applied to future earnings, while also making relatively safer fixed-income assets more attractive to investors. The latest move in yields has therefore added to concerns around elevated valuations across the AI and semiconductor trade.
Investors are also keeping a close watch on developments in the Middle East, with concerns that prolonged geopolitical tensions could keep crude oil prices elevated. US crude prices approached $85 a barrel as tensions in the region showed little sign of easing. Negotiations between Iran and the US have also stalled, adding to uncertainty around the outlook for oil supplies and inflation.
Higher energy prices could make it more difficult for inflation to ease, potentially keeping interest rates higher for longer and further supporting Treasury yields.
The dollar was little changed, while gold prices declined.
The latest decline also appears to reflect profit booking after a strong run across several AI and semiconductor stocks. Companies linked to the AI infrastructure build-out, including chipmakers, memory companies, optical technology providers and data-centre equipment manufacturers, have attracted significant investor interest on expectations of sustained AI-related capital expenditure.
However, elevated valuations have left several of these stocks vulnerable to sharp pullbacks when broader risk appetite weakens. The combination of rising Treasury yields, a broader technology-sector sell-off and profit booking has therefore triggered a reversal in the AI chip trade.
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