US Stock: S&P, Nasdaq end lower on semiconductor selloff as AI spending concerns mount

Semiconductor stocks, led by NVDA and AMD, experienced sharp declines as institutional investors reassess the valuation case for AI-dependent chipmakers amid debt-fueled spending concerns. This selloff signals a potential rotation away from high-growth, capital-intensive narratives that have dominated tech since late 2023.

The broader market pressure on the S&P 500 and Nasdaq reflects positioning adjustments driven by two confluent factors: mounting skepticism over AI capex sustainability and market repricing for a second Fed rate hike by year-end. This hawkish repricing erodes the duration advantage of unprofitable growth stocks and increases the cost of servicing debt-heavy AI infrastructure buildouts.

MRVL and MU alongside other semiconductor suppliers face near-term headwinds as investors de-risk exposure to the capital equipment and memory chip cycles that benefit from AI datacenter demand. GOOGL participates in both the capex narrative (as a heavy AI spender) and as a beneficiary (through data center revenue), creating mixed directional pressure.

Sector implication: The Technology sector's negative momentum signals potential consolidation or rotation into defensive equities. The confluence of AI spending skepticism and monetary tightening expectations creates a risk-off environment favoring lower-beta, cash-generative businesses over speculative growth narratives.