Futures Slide as TSMC Results Reignite AI Concerns, Korea Sell-Off Deepens

The artificial intelligence trade that has powered markets this year came under renewed pressure as investors questioned whether the massive buildout in computing capacity will produce adequate returns. The rout deepened in South Korea, where the Kospi index plunged 6.4% and its two largest components, Samsung and SK Hynix, each fell more than 10%.

**TSMC Earnings Fail to Lift Semis**

Taiwan Semiconductor Manufacturing Co. beat analyst estimates in its second-quarter earnings report, with profits surging 77% year over year. The company also raised its sales and spending projections for the year, signaling confidence that torrid growth in demand for chips and data centers will extend into 2027. TSMC plans to spend $60 billion on capital investment this year, up from a prior forecast of about $54 billion, and an additional $100 billion to expand U.S. chipmaking capacity.

Yet American depositary receipts for TSMC fell 4.6% in premarket trading Thursday morning, and the broader chip complex weakened. Among peers, Nvidia dropped 1.5%, while Micron and Marvell also declined. The negative reaction highlighted deepening skepticism about AI-related spending, even from the industry’s bellwether.

“There’s been a lot of concentration in the market and that means there’s little room for error,” said Richard Flynn, managing director at Charles Schwab UK, as reported by Zerohedge. “Global geopolitical risk is elevated and so there’s a relative tone of caution fundamentally looking at the macro outlook.”

**Korea Rout Triggers Regulatory Response**

The sell-off in Seoul was particularly severe. Korean authorities moved to curb volatility, announcing a temporary halt on new listings of single-stock leveraged exchange-traded products tied to the two chip giants. The move came after leveraged ETFs amplified the losses, adding to a momentum unwind that Goldman Sachs characterized as the worst monthly plunge in high-beta momentum since the Global Financial Crisis, according to Zerohedge.

**Broader Markets Under Pressure**

As of 8:15 a.m. ET Thursday, S&P 500 futures were down 0.3% and Nasdaq 100 contracts dropped 0.8%, reversing much of the prior session’s gains. “The market has a defensive tilt as the AI theme is poised to move lower,” JPMorgan strategists said, as reported by Zerohedge.

European stocks also faced a downbeat start, with the pan-European STOXX 600 falling 0.6%, according to a separate report from RTTNews via Nasdaq. Asian markets traded lower for a second consecutive day amid growing questions about sky-high AI-driven valuations. U.S.-China tensions also weighed after President Donald Trump accused Beijing of exploiting U.S. election data in a primetime address.

**Fed Remarks and Commodities Add to Caution**

Dallas Federal Reserve President Lorie Logan on Thursday called for “modestly” higher interest rates to balance the Fed’s dual mandate, arguing that inflation remains far above the 2% target and that without policy action it could become entrenched. Hawkish comments from other Fed officials also kept investors on edge, according to the RTTNews report.

Brent crude futures traded above $85 a barrel, on track for a 12% weekly gain, as shipping traffic slumped through the Strait of Hormuz amid intensified U.S. strikes against Iran. The geopolitical tensions compounded inflation worries.

**Corporate Movers**

In premarket trading, several large-cap tech stocks diverged. Alphabet rose 1.3%, Microsoft gained 1.3%, Amazon added 0.7%, and Meta edged up 0.3%, while Apple rose 0.4% and Tesla slipped 0.2%. Nvidia fell 1.5%.

UnitedHealth Group jumped 7% after raising its full-year outlook and reporting quarterly profit well ahead of Wall Street expectations. Peer insurers Humana and Centene rose 5% and 3%, respectively.

Sandisk, the NAND memory chip manufacturer, tumbled 9.6% in morning trading, though a separate Nasdaq analysis noted that TSMC’s higher investment could actually boost demand for Sandisk’s memory chips used in AI systems. GE Aerospace fell 4% after the jet-engine maker posted quarterly results and an updated forecast. United Airlines dropped 3% after its full-year adjusted EPS forecast trailed the average analyst estimate.

Netflix forecast third-quarter revenue and earnings that fell short of Wall Street estimates, adding to the cautious tone ahead of next week’s earnings from Alphabet, Amazon, Microsoft and Meta Platforms.

**Data Watch**

Investors are now focused on June retail sales data, which will test the strength of the American consumer. A stronger-than-expected print could pull inflows into consumer-related sectors, which still have light positioning, according to Zerohedge.