Nasdaq Falls as Memory Chip Competition Pressures AI Stocks’ Profit Outlook

S&P futures are near flat as falling yields offset a sharp selloff in AI stocks. The bigger story is the gap between a resilient broader market and a Nasdaq weighed down by its concentration in technology. I still favor an S&P 500 move toward 8,000, while the Nasdaq could remain weak in the near term.

In One Minute

S&P futures are down 0.1%, while Nasdaq futures are down 0.8% and point to a 250-point opening decline. Concerns about stronger competition in memory chips are pressuring the AI trade, but falling yields and buying in beaten-down stocks are helping the broader market hold up. The main risk is that increased supply reduces chip prices and profit margins. The S&P 500 still has a bullish bias toward 8,000, while the 10-year yield is moving toward its first support around 5%.

The Context

Lower yields would normally help stocks, but the AI selloff is canceling out some of that benefit today. Money is moving toward beaten-down names and real estate investment trusts, which are getting support from falling rates. Earnings season is also underway, with bank results showing a modest positive bias alongside separate reactions in Johnson & Johnson and United Health.

CXMT, a Chinese company, announced a memory chip it says offers more value and packs more memory into a single chip. If that supply reaches the global market, it could pressure prices and reduce the number of chips customers need to buy. High prices and strong profits attract competitors, and that additional production can squeeze margins, meaning the profit companies keep from their sales.

Key Developments

Major Indexes and Rates

S&P futures are slightly below yesterday’s close, down 0.1%, which is a small move compared with the selling in technology. I still expect the S&P 500 to break out toward approximately 8,000, where I think a top becomes more likely. Losing the support area I am watching would move me to neutral, and a further breakdown would turn the outlook bearish.

Nasdaq futures are down 0.8%, with the market set to open 250 points lower. The daily candle reflects the pressure coming from AI stocks, where much of the Nasdaq’s exposure is concentrated. That weakness could continue in the near term, even while the S&P 500 maintains its bullish bias.

The 10-year yield is at 5.206%, moving lower after the bond market reopened following yesterday’s closure. Last Wednesday formed a daily long upper wick, and Friday’s close produced a weekly long upper wick, giving us two bearish reversal signals within the same week. I expect yields to continue falling toward roughly 5%, where they meet their first support.

Energy and Precious Metals

Oil is flat to slightly lower, and $88.75 remains the key level. Several earlier price turns line up there, so holding above it leaves room for sideways trading or a move higher. A break below it opens the downside, with the target moving from the initially mentioned $70 to approximately $77.

Gold is catching a small bid as yields decline. It continues to hold its longer-term support trend line. That line remains the key feature of the current chart.

Silver is slightly weaker, and I think concern about AI spending is contributing to that relative weakness. Approximately $1 trillion in AI capital spending has been a major economic driver, and I think that support is probably part of why the United States has avoided recession. If weakening AI investment slows the domestic and global economies, silver’s industrial demand could suffer, even though it also serves as a store of value. A close below the support being watched, followed by confirmation of the breakdown, would put $50 in play later this year.

Natural gas had a sharp selloff last Thursday after reaching the trend line, then recovered 50% of that decline on Friday. Monday’s decline recovered to an essentially flat close, and buyers are coming in again after Tuesday’s weakness, which I read as institutional accumulation. I expect a breakout within approximately a week, followed by a move toward $350, possibly higher. The trend line has been tested five times, and I think a sixth or seventh test could finally push through its weakening resistance.

Technology and AI Stocks

SanDisk, Micron, and Seagate (STX) are taking heavy selling as investors reconsider the profitability of the AI trade. The concern is that more competition and more memory per chip could reduce pricing power and demand for individual chips. These sharp moves are also where I see the most active day trading opportunities today.

SanDisk is bouncing slightly from its lows but remains sharply lower. Its longer-term support trend line comes in around $1,300, which would be a particularly interesting level if price reaches it today. There is also a gap fill at $1,275, where price would revisit an area skipped during an earlier move, while $1,333 offers a more aggressive possibility. Beyond those areas, I do not see much else on the chart, and its support trend line has not yet broken.

Micron broke its comparable support trend line yesterday and is gapping lower again today. A gap fill at $926 offers an aggressive day trade possibility. The next strong technical level is $905, making that another important area to watch.

Marvell (MRVL) is also falling this morning. The main support zone is $241 to $240. I expect that area to offer significant support.

Consumer Stocks

Nike has risen almost every day since its earnings gap lower, when it was down as much as 10% before the open. It is higher again this morning and has recovered above the closing price from just before earnings. The move from $31 before the open to nearly $36 has gone too far, too fast for me to buy here, so I have taken profits. On a pullback, I would look to buy again.

Clorox (CLX) fell into a combination of longer-term technical support and horizontal support. It formed a long lower wick there, a bullish reversal signal showing that buyers pushed price back up from the lows. It is trading at $85.50, and I expect at least $87.75 before it encounters resistance.

Banks

JP Morgan Chase initially dropped after earnings came in at $5.75 versus $5.94 expected. Revenue beat expectations by a significant margin, helping the stock rebound, although the gain is modest. It had reached support a few days before earnings, so a bounce is not surprising. I do not expect a return to record highs here, and I think economic trouble could hurt banks significantly.

Bank of America has been beaten down and could have a little more upside after its decline. That fits the rebound potential we are seeing across the banks. I view this as room for a bounce, rather than evidence that the group is heading back to its highs.

Goldman Sachs is higher after earnings, but the move is not large or volatile enough to interest me in a day trade. For a swing trade, I am watching approximately $1,000, where a return to the broken parallel channel could meet resistance. Earlier lows and highs define that channel, and the daily chart has already broken below it. A recovery to $1,000 would be a potential short setup, with an expected rejection and move lower.

Wells Fargo is slightly lower after earnings did not quite meet expectations. Citigroup is flat to slightly positive following its results. Overall, the reporting banks have a slight positive bias, with Wells Fargo the exception.

Health Care Stocks

Johnson & Johnson has fallen from approximately $264 at yesterday’s close to around $258. That is a $6 decline, less than 3%, so it is not a particularly large earnings move. An earlier low around $251 interests me for a potential day trade. The bigger swing trade support is approximately $247, where previous high and low turning points line up.

United Health rose from $378 to approximately $394 after earnings, briefly touching $400 before easing from its highs. The daily chart had been trending lower, so this is a rebound within that decline. First resistance is around $405, with $406 the more specific level for a high-risk day trade based on earlier peaks. If price gets through that area, I am watching $415 as the next resistance.

Digital Assets and Crypto

Bitcoin

Bitcoin is rebounding after yesterday’s sharp decline, when a small bearish pattern was attempting to break down. Overnight, price returned to $81,000, and that support is holding for now. Between $81,000 and $87,200, I see sideways chop rather than a clear directional move.

A break below $81,000 points toward $75,500, while a break above $87,200 could take Bitcoin toward $95,000 to $97,000. Whichever boundary breaks could produce a large move in that direction. Leverage makes the repeated swings inside this range especially difficult, so I would step back and wait for the chart to show which way it breaks before getting involved.

Why It Matters

The broader market can hold up while AI stocks fall because money is finding other places to go. Retail investors may move into cash or money markets when they get nervous, while hedge fund managers often look for another investment that can generate returns. The traditional fee model is 2% of assets and 20% of profits, although that structure has changed over time. That helps explain the buying in beaten-down names such as Nike and Clorox while AI stocks are under pressure.

The AI concern also reaches beyond chipmakers because investment spending has supported the economy. Less spending could weaken activity and reduce industrial demand for silver. At the same time, falling yields are helping real estate investment trusts and giving gold a small lift.

Key Details

Bull Case

The S&P 500 continues to hold up, keeping the breakout outlook toward 8,000 intact. Falling yields support real estate investment trusts, while buying in Nike and Clorox shows money rotating into beaten-down stocks. Clorox’s reversal supports a move toward $87.75, and Nike would interest me again on a pullback.

Gold is holding its trend line, and repeated buying in natural gas supports the breakout expectation. The banks are showing modest rebound strength, including further upside potential in Bank of America. United Health could face $415 if it clears its first resistance area, while Bitcoin needs to break $87,200 to open the way toward $95,000 to $97,000.

Bear Case

More memory supply and stronger competition could drive down prices and squeeze AI profit margins. That keeps the Nasdaq vulnerable, and Micron’s broken support trend line shows the technical damage already occurring. The S&P 500 outlook would turn neutral if its watched support fails, then bearish on a further breakdown.

Oil breaking $88.75 would open the downside toward approximately $77. Silver needs a confirmed support breakdown before $50 becomes the target later this year, while Bitcoin losing $81,000 points toward $75,500. Economic weakness remains a risk for banks, and Goldman Sachs returning to approximately $1,000 could offer a rejection setup.

What to Watch Next

I am watching whether the S&P 500 continues to hold its support area while AI stocks remain under pressure. The next major yield reference is around 5%, and oil’s dividing line remains $88.75. In silver, the question is whether a close below support receives confirmation, while natural gas needs to deliver the breakout its repeated tests suggest.

For the AI names, the focus is on SanDisk’s $1,333, $1,300, and $1,275 areas, Micron’s $926 and $905 levels, and Marvell’s $241 to $240 support. Goldman Sachs needs to return toward $1,000 for the swing short setup, while Johnson & Johnson’s potential entries remain $251 and $247. United Health faces $405 to $406 before $415, and Bitcoin needs to resolve its $81,000 to $87,200 range.

Bottom Line

The main story is money rotating out of AI stocks while falling yields help other parts of the market hold up. That keeps the S&P 500’s bullish outlook intact, even as the Nasdaq faces pressure from concerns about competition and margins. Bitcoin still needs to break its range, and the individual stock setups depend on price reaching the levels we have discussed. Let those levels come to you before committing.