U.S. stocks fell sharply on Monday, with the Dow, S&P 500, and Nasdaq all sliding as a selloff in chipmakers intensified. The decline was sparked by Samsung and DeepSeek, which fueled fears of softening demand for artificial intelligence semiconductors. Oil prices gained during the session, adding further pressure on equities.
The rout extended beyond the U.S., dragging markets lower worldwide as AI-related stocks resumed their drops. Investors are reassessing the outlook for the technology sector after a prolonged rally, with concerns that valuations may have outpaced fundamentals. The simultaneous rise in crude prices complicated the picture for central banks still battling inflation.
Semiconductor stocks bore the brunt of the selling, with major chip companies posting steep losses. The Nasdaq, heavily weighted toward tech, was the worst performer among the major indices. The Dow also fell, though the decline was partly cushioned by strength in energy shares tied to higher oil prices.
The selloff raises questions about the durability of the AI-driven market rally that has dominated 2023 and 2024. If AI demand proves weaker than expected, the sector could face further corrections. Higher oil prices may also squeeze corporate margins and consumer spending, adding headwinds for the broader economy.
Some analysts argue the pullback is a healthy correction after months of gains, not the start of a prolonged downturn. They point to still-strong earnings in parts of the tech sector as a reason for measured optimism.