Shares of companies linked to artificial intelligence saw a decline on Tuesday as investors awaited Nvidia’s quarterly earnings, which are expected to provide insight into demand and justify the sector’s high valuations.
The global technology sector faced a sell-off following a report from TD Cowen, which stated that Microsoft had canceled leases for substantial data center capacity in the U.S. with at least two private data-center operators.
Nvidia, a key player in AI, fell 2.1% ahead of its highly anticipated earnings release on Wednesday. Investors are closely watching for indications of demand for its high-priced AI chips, particularly after the emergence of cost-effective AI models from China’s DeepSeek shook the industry.
AJ Bell’s investment director, Russ Mould, noted in a statement, “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.”
Chip stocks also faced pressure following reports that the U.S. government was considering additional restrictions on Nvidia’s chip exports to China and was in discussions with allies about further tightening controls on China’s access to advanced chips.
Other semiconductor companies, including Broadcom and Micron Technology, each saw a decline of approximately 2.1%, while a broader semiconductor index slipped 1.8%.
Investor concerns have been growing over the massive investments made by U.S. tech firms in AI infrastructure, given the slow financial returns and the rapid advancements at Chinese AI startup DeepSeek.
Shares of data center operator Digital Realty fell 1.2%, while Vertiv Holdings, a company specializing in designing and building data center infrastructure, dropped 2.3%.
Energy companies, which are expected to benefit from the increased power demand of AI-driven data centers, also faced losses, with Vistra down 5.9% and Constellation Energy declining 3.3%.
Super Micro Computer, an AI server manufacturer, was among the biggest losers in the S&P 500, with shares plunging 8.7% ahead of the deadline for its delayed annual filing.
Meanwhile, Palantir, a data analytics firm favored by retail investors for AI-related trades, saw its shares decline by 3.7%.
