Artificial intelligence-linked shares fell on Tuesday, in lead-up to AI bellwether Nvidia's (NVDA.O) quarterly earnings, which could offer clarity on demand and justify the sector's lofty valuations.
Technology stocks globally sold off this week after a TD Cowen analyst note said Microsoft has canceled leases for sizeable data center capacity in the U.S., with at least two private data-center operators.
AI-darling Nvidia dropped 2.1% ahead of its highly anticipated quarterly earnings on Wednesday, where investors will focus on demand for its pricey AI chips after low-cost AI models from China's DeepSeek rattled the industry.
"It must be noted that such lulls are not uncommon, especially ahead of a set of results, but bulls of US equities more generally will be looking to Nvidia for reassurance," AJ Bell's investment director Russ Mould said in a note.
Chip stocks were also hit following a report that said the U.S. was planning further restrictions on Nvidia's chip exports to China and that Washington was consulting with allies about tightening chip controls on China.
Other chipmakers such as Broadcom (AVGO.O) and Micron Technology (MU.O) were down around 2.1% each, with a gauge of semiconductor stocks (.SOX) sliding 1.8%.
Investor skepticism has grown over the billions that U.S. tech firms have channeled into AI infrastructure due to slow payoffs and breakthroughs at Chinese startup DeepSeek.
Data center operator Digital Realty (DLR.N) slipped 1.2%. Vertiv Holdings (VRT.N), which designs and builds data center infrastructure, slipped around 2.3%.
Power companies, which are expected to see a surge in demand from energy-intensive data centers needed to develop AI technology, also came under pressure, with Vistra (VST.N) dropping 5.9% and Constellation Energy (CEG.O) off 3.3%.
AI server maker Super Micro Computer (SMCI.O) was among the top laggards on the S&P 500 (.SPX), with shares sliding 8.7%, ahead of the deadline for its delayed annual filing.
Data analytics firm Palantir (PLTR.O) — a favorite among retail investors to trade AI — dipped 3.7%.
