Tonight's Highlights: Tech Pullback and Middle East Tensions Weigh on US Futures; Chip Stocks Retreat Under AI Cool-off

US stock index futures slid on Monday as chipmakers tracked overseas peers sharply lower premarket, sending Nasdaq 100 futures down over 1%. Major European indices logged widespread losses.

 

A wave of profit-taking hit AI-related concepts as investors increasingly question whether the artificial intelligence trade has room left to run.

 

Geopolitical tensions escalated over the weekend as the US and Iran exchanged retaliatory airstrikes. Iran targeted US facilities across multiple Gulf nations and announced the closure of the Strait of Hormuz.

 

US President Donald Trump stated on Monday that the US delivered a "heavy blow" to Iran overnight, adding that the US is highly likely to take control of and manage the strategic waterway. In response, global benchmark Brent crude jumped nearly 4%, closing in on $80 per barrel.

 

Following a blockbuster US trading debut last Friday, memory giant SK Hynix plunged 15% in South Korea on Monday—marking its largest single-day drop on record. Its US-listed American Depositary Receipts (ADRs) tumbled over 10% in premarket trading.

 

The selloff was triggered by a Monday note from domestic brokerage Korea Investment & Securities (KIS), which projected that SK Hynix’s second-quarter operating profit will slightly miss consensus estimates.

 

The correction in SK Hynix dragged the broader semiconductor space lower in US premarket trading, with Micron falling over 5% and SanDisk dropping more than 6%.

 

Wall Street’s second-quarter earnings season officially kicks off on Tuesday, spearheaded by five major US banks, including JPMorgan Chase and Goldman Sachs. Netflix, Johnson & Johnson, and UnitedHealth are also scheduled to report this week.

 

Market expectations run high for this reporting cycle. According to FactSet data, analysts expect aggregate S&P 500 earnings to grow by more than 23% year-over-year for the second quarter.

 

Larry Adam, Chief Investment Officer at Raymond James, noted that tech remains a critical sector to watch this earnings season, particularly regarding whether AI can continue to propel industry bottom lines.

 

"While the market worries that hyperscalers might begin tapering their AI-related capital expenditures, we expect companies to reaffirm their capex plans and sustain investment growth through 2028," Adam wrote in a note to clients. "This resilience stems from the tangible returns enterprises are already capturing from AI applications. AI mentions across all 11 sectors surged 98% year-over-year, hitting a record high."

Corporate News

• Meta Upsizes Louisiana AI Data Center to 5GW, Scaling Cumulative Investment Past $50 Billion

  On July 13, Meta announced an expansion of its Richland Parish, Louisiana data center to a 5GW computing capacity capacity. The move raises its cumulative local investment to over $50 billion—adding roughly $40 billion to the $10+ billion blueprint unveiled in 2024—making it one of the largest AI infrastructure projects globally. Meta stated the expansion includes an additional $1 billion dedicated to local infrastructure, including roads, water supply, and sewage systems.

• Intel Commits Extra €5 Billion to Irish Plant to Boost AI Chip Capacity

  Intel announced on July 13 that it will inject an additional €5 billion (approximately $5.7 billion) into its Leixlip campus in Ireland. The investment aims to expand advanced manufacturing capabilities to meet AI and high-performance computing demand. The chipmaker will upgrade existing fab facilities, install advanced manufacturing equipment, and expand automated production systems to scale capacity for Intel Xeon 6 and next-generation Xeon server processors under the Intel 3 process node, alongside expanding R&D operations.

• TSMC Commences 2nm Mass Production; Next-Gen Google Pixel to Debut the Node

  According to reports, TSMC has commenced mass production of its 2-nanometer node. Google has secured the position as the debut customer for TSMC's 2nm mobile chips, with plans to launch its new handset in mid-August—beating Apple to the node by a month.

• LS Electric and Infineon Partner on DC Power Solutions

  According to a July 13 statement, South Korea's LS Electric has entered a partnership with Infineon to co-develop direct current (DC) power solutions tailored for AI data centers and next-generation power grids. The collaboration covers power conversion units for energy storage systems (ESS), solid-state transformers, and solid-state circuit breakers.