U.S. stocks opened mixed on Tuesday, with weakness in chip stocks dragging down the NASDAQ Composite and S&P 500. The Dow Jones Industrial Average hovered near record levels, buoyed by gains in healthcare, financials, and select large-cap names.
Investor attention returned to the AI trade after reports emerged that China’s DeepSeek is developing its own AI chip. The news introduced fresh uncertainty about demand for U.S.-linked semiconductor names, even as Samsung posted a strong profit update.
NASDAQ Falls as Chip Stocks Retreat
The NASDAQ Composite opened 161 points lower, or 0.62%, at 25,960.13. The S&P 500 fell 20.8 points, or 0.28%, to 7,516.63. The Dow Jones Industrial Average rose 48.1 points, or 0.09%, to 53,104.06 at the opening bell. Later in the morning, the Dow gave back part of its early gain and traded near the flat line. The blue-chip index had earlier touched a new all-time intraday high. The S&P 500 declined 0.5%, while the NASDAQ lost 1.3% as chip selling intensified.
DeepSeek AI Chip Report Roils Semiconductor Sentiment
According to reports, DeepSeek is working on its own AI chip, a move that could reduce its reliance on suppliers such as NVIDIA and Samsung. NVIDIA shares traded more than 1% lower as investors assessed the implications. The selling spread across major chip names: Micron fell about 7%, while KLA, Marvell Technology, Broadcom, and AMD also posted losses. The VanEck Semiconductor ETF dropped more than 5%, reflecting broad weakness across the sector.
Samsung Reaction Adds to Doubts About AI Earnings Bar
The pressure originated in Asia-Pacific markets before reaching Wall Street. South Korea’s Kospi dropped nearly 5% after Samsung Electronics fell close to 7%. Samsung reported a sharp rise in second-quarter profit, but the market focused on spending plans and demand concerns. Adam Crisafulli of Vital Knowledge noted that the Samsung reaction highlights one of the biggest risks heading into earnings season: “Q2 earnings results are likely to be quite robust on an absolute basis … but unlike with the Q1 season, expectations are presently very bullish.” His comment pointed to uncertainty about whether strong earnings alone can support AI-linked stocks, given that the S&P 500 has moved significantly higher since the first-quarter reporting season.
Dow Holds Near Record as Investors Rotate
While chip stocks came under pressure, investors rotated into other parts of the market. Eli Lilly gained more than 2%, while JPMorgan Chase and Microsoft also advanced. Walmart added more than 2% after announcing price cuts on products such as ground beef and Coca-Cola. The rotation helped the Dow stay near 53,000 even as the NASDAQ weakened, showing that selling was concentrated in AI- and chip-linked shares rather than across the full market.
Apple, Rivian, Amazon, and Trade Data in Focus
Apple drew attention after JPMorgan raised its price target to $345 from $325, maintaining an Overweight rating. Analyst Samik Chatterjee said Apple’s revenue and earnings could be better than feared, even after a 20% price increase on iPads and Macs. Rivian shares fell more than 13% in morning trading after the electric vehicle maker announced a public offering of 75 million Class A shares. The drop followed a 8.1% rise on Monday and a 19% gain last week. Amazon also stayed in focus after sources said the company planned to raise $25 billion through a bond sale; its shares gained 0.8% in premarket trading.
Meanwhile, the U.S. trade deficit widened sharply in May. The Commerce Department reported a deficit of $77.6 billion, up from a revised $54.6 billion in April. Exports fell 3.2%, while imports rose 3.3%. Economists polled by Dow Jones had expected a deficit of $78.08 billion.
The market now shifts its attention to upcoming corporate earnings, which will determine whether the recent rotation out of AI chip stocks is temporary or the start of a broader change in investor sentiment.
