Wall Street appeared poised for a weaker start to the trading day as investors pared back positions in technology stocks amid renewed concern that interest rates may remain higher for longer and that the large-scale spending underpinning the artificial intelligence boom may not be indefinitely sustainable.
By 04:33 ET, futures tied to the Nasdaq 100 led the market lower, reflecting the concentration of AI-exposed names within that index. Nasdaq 100 futures had fallen 2.8%, S&P 500 futures were down 1.45% and Dow futures slipped 0.7%.
Market participants said the pullback centered on a reassessment of AI-related companies after a long stretch of strong performance for technology and semiconductor stocks. Those sectors have been among the biggest beneficiaries of the market rally over the past year, making them particularly sensitive when investor sentiment shifts.
For many investors, the immediate issue is whether the recent weakness is merely a healthy pause in the AI trade or the start of a broader valuation reset across the sector as questions mount over ongoing capital expenditures for data centers, chips and other infrastructure.
SpaceX downturn deepens
SpaceX continued to be a focal point of selling pressure. The stock, which had plunged 16.4% on Monday, extended that decline with a further 2.9% drop in premarket trading.
Analysts at KeyBanc took a more conservative view of the company, arguing that SpaceX’s valuation had become increasingly stretched following the dramatic rally after its public debut earlier this month. The shares closed Monday at $154.59, close to the IPO opening price of $150 and well below their recent peak of more than $225.
The recent selloff erased about $400 billion from SpaceX’s market capitalization and has amplified debate among investors about whether long-term growth prospects can justify the company’s elevated valuation. In addition to market moves, SpaceX disclosed a senior notes offering and reported holding more than $100 billion in cash and cash equivalents as of June 19.
The volatility around SpaceX underscores a broader market divide: enthusiasm for AI and related technologies remains robust for many, but buyers are increasingly selective about the price they will pay for future expansion.
Dealmaking heats up in AI chip space
Competition for AI assets is intensifying. Qualcomm is reportedly in advanced talks to acquire AI chip startup Modular in a deal that could value the company at about $4 billion, according to Bloomberg News. That reported figure is more than double the $1.6 billion valuation Modular obtained in a funding round less than a year ago.
Qualcomm has been pursuing diversification beyond its core smartphone business by moving into data centers, artificial intelligence and autonomous vehicle applications. The company is also said to be exploring a separate acquisition of AI startup Tenstorrent. These reported talks illustrate how established technology companies are racing to bolster their positions in the expanding AI ecosystem as demand for sophisticated computing infrastructure continues to grow.
For investors, the reported discussions serve as a reminder that AI remains a dominant growth theme in technology – even as valuation concerns produce short-term market volatility.
Oil drifts lower on diplomatic progress
Crude prices continued to decline after steep losses in the prior session as diplomatic developments eased concerns about immediate disruptions to global energy supplies. Sentiment improved after Washington issued a 60-day license permitting the sale and import of Iranian crude oil and petroleum products as part of ongoing negotiations with Tehran.
The decision followed reports of movement toward a broader peace agreement and an extension of an interim ceasefire arrangement. Investors increasingly view the potential return of more Iranian oil to global markets, should talks keep advancing, as a factor that could alleviate supply anxieties that had supported crude prices in recent months.
Lower oil prices could help dampen inflationary pressures and provide relief to consumers, though sustained weakness in crude would likely put pressure on energy producers’ revenues and cash flows.
Quantum gets a policy lift
Shares of several quantum-computing companies rallied after President Donald Trump signed executive orders intended to speed development of the technology in the United States. The measures aim to field a research-capable quantum computer by 2028 and to accelerate deployment of quantum-resistant cybersecurity systems across federal agencies.
Investors responded by bidding up stocks of firms including Infleqtion, Rigetti Computing, D-Wave Quantum and IonQ in premarket trading. IBM also recorded gains after Mr. Trump publicly praised CEO Arvind Krishna.
The orders signal that the U.S. government views quantum computing as strategically important and is prepared to support development through federal initiatives. While widespread commercial applications of quantum technology remain years away, many investors see government backing as a catalyst that could strengthen the case for long-term investment in the sector beyond today's AI-focused growth story.
What this means for markets
- Technology and semiconductor stocks remain vulnerable to shifts in AI investment sentiment and rate expectations.
- Energy markets are responsive to diplomatic developments that could alter near-term supply dynamics.
- Policy moves can quickly influence investor appetite for emerging technologies such as quantum computing, even when commercial maturity is distant.