Nasdaq selloff 🚩 DeepSeek and Samsung earnings reaction sink semiconductor stocks

Memory and semiconductor stocks are dragging Wall Street lower today, sending the Nasdaq 100 down around 2%, while the Dow Jones Industrial Average loses 0.3% and the S&P 500 declines 0.5%. Shares of Micron, SanDisk, Intel, Applied Materials, and Marvell are down between 6% and 10%, with the selloff largely triggered by the market's negative reaction to Samsung's earnings. Today's weakness across the Nasdaq and semiconductor sector reflects deteriorating sentiment toward artificial intelligence, which has been the primary driver of this year's rally. At the same time, geopolitical tensions have escalated following attacks on commercial vessels near Oman and the Strait of Hormuz, increasing tensions involving Iran, the United States, and Qatar. Higher oil prices are also weighing on technology stocks.

• Nvidia shares are falling after Reuters reported that Chinese startup DeepSeek is developing its own AI chip, a move that could eventually reduce its reliance on Nvidia and Huawei processors.
• The news sparked a broad selloff across semiconductor stocks. The Philadelphia Semiconductor Index is down more than 5%, while Intel, Micron, Marvell, Western Digital, and SanDisk are all posting steep losses.
• Investors are also taking profits after the sector's powerful AI-driven rally, amid concerns that valuations have become stretched and that the upcoming earnings season could bring significantly higher volatility.
• Samsung's earnings also failed to support the sector. Although the company reported exceptionally strong profit growth, its shares declined, further weakening sentiment toward memory and semiconductor stocks.
• The market is also preparing for SK Hynix's upcoming Nasdaq listing while awaiting the release of minutes from the first Federal Reserve meeting chaired by Kevin Warsh, encouraging some investors to reduce risk exposure.

As a result, pressure on the largest AI-related companies is weighing on the broader Nasdaq, given the technology sector's dominant index weighting and the importance of Nvidia, TSMC, and other semiconductor companies within the benchmark.

Source: xStation5

US100 chart (H1 interval)

Looking at the US100 chart, we can see that the 30,450-30,800 point area has repeatedly attracted strong selling pressure. Should the index break below 29,100, the next likely downside target would be around 28,100, where previous buying interest emerged. For now, the key resistance remains the 30,000-point level.

Source: xStation5

TSMC shares (D1 interval)

Shares of Taiwan Semiconductor (TSMC.US), the world's largest semiconductor manufacturer, have retreated nearly 10% from their recent highs and are now testing the lower boundary of their ascending price channel. Key support is located near $430 per share, while the upper boundary of the channel currently stands around $480. The nearest resistance is the 50-day EMA (orange line), currently near $450.

Source: xStation5

Why are Samsung shares falling?

Paradoxically, Samsung's earnings were not the problem. On the contrary, the company reported a 19-fold increase in operating profit, dramatically outperforming last year's results. However, equity markets look forward rather than backward. Investors concluded that even such spectacular numbers did not provide a compelling new reason to justify further expansion in AI-related valuations.

• First, expectations had already become exceptionally high. Memory manufacturers have been among this year's biggest beneficiaries of the AI investment boom, meaning that even record earnings only modestly exceeded analyst expectations. This is a classic "buy the rumor, sell the news" reaction, where excellent results become an opportunity to lock in profits.
• Second, Samsung released only preliminary earnings and did not provide detailed information on its semiconductor business or updated forward guidance. Investors were left without a clear answer to the key question: can today's AI-driven growth rates be sustained over the coming quarters?
• Sentiment was further pressured by growing doubts about the longevity of the AI investment cycle. Reports that Meta is considering commercializing excess computing capacity, combined with news that DeepSeek is developing its own AI processor, prompted investors to reassess long-term demand for the most advanced AI chips. This does not necessarily imply that demand is weakening today, but it has increased concerns that the current AI investment boom may not continue indefinitely.

Ultimately, Samsung did not disappoint on earnings. Instead, investors were disappointed that its record results failed to provide a fresh catalyst for further gains across the semiconductor sector. With valuations already elevated, even outstanding financial performance proved insufficient to attract additional buying, leaving the market increasingly sensitive to the cyclical risks facing the industry.

Samsung shares (D1 interval)

Samsung shares are currently correcting a substantial portion of their recent rally and have fallen back below the 50-day EMA (orange line), in a move resembling the March-April 2026 correction triggered by Middle East tensions. The stock is now trading approximately 25% below its all-time high.

Source: xStation5