Chip rout drags down stocks as investors rotate out of tech

It’s soccer summer, Knicks in five, baseball’s back, and everyone watching the game is looking down at their phone. After launching a prediction market platform in December, DraftKings is ready to ride this wave. And on Tuesday, the traditional sports betting company announced it actually had something to show for it.

Consumer trading volume in the month of May grew 24% to $1.3 billion and total trading volume increased 34% to $3.1 billion, according to a DraftKings SEC filing. Investors responded by lifting the stock 10% on Tuesday.

FanDuel parent company Flutter Entertainment was also trading higher.

Both sports betting companies reported upbeat earnings last quarter, besting Wall Street expectations, and have gained over the past month following declines of 49% and 23% since January, respectively.

DraftKings and FanDuel have both struggled as Kalshi and Polymarket encroach on their customers. Sports betting has been key to the growth of prediction markets, making up 39% of total trading volume on Kalshi and 80% on Polymarket since July 2024.

Rivian is sinking on Tuesday, the launch day of its highly anticipated R2 SUV.

The EV maker’s shares are down more than 7% on Tuesday afternoon, erasing a chunk of the gains they raked in during their recent 10-day winning streak.

Aside from a broad market sell-off and some selling the R2 launch news, online chatter also reveals some customer disappointment with lease prices for the new model. The performance trim lease prices are listed at $829 a month on Rivian’s site, close to the monthly price of the more expensive R1S. A Reddit post referred to those rates as “out of control” and “a huge disappointment.”

The R2 was announced as a lower-cost $45,000 SUV but is launching at higher-trim levels priced closer to $60,000. Rivian’s larger R1S starts at around $77,000. Rivian has implied annual R2 deliveries of between 20,000 and 25,000 units this year.

Chipmakers, artificial intelligence giants, and other highly valued tech stocks plunged Tuesday, dragging major US stock indexes deep into the red as the recent chip and AI complex comeback abruptly fizzled.

The Invesco QQQ Trust, which tracks the Nasdaq 100, is off around 3% on the day, and S&P 500 is down almost 2%.

The iShares Semiconductor ETF is also sinking, effectively giving up all the gains it saw yesterday as it surged to one of its best days of the year.

Wall Street initially opened in positive territory, but enthusiasm rapidly deteriorated midday as investors seemed to aggressively lock in profits on volatile, high-growth semiconductor stocks that, until recently, had been shooting upward.

This pivot follows a brutal trading day last Friday when momentum stocks collided with a rosy jobs report, profit-taking, and perhaps some very belated pessimism triggered by disappointing guidance from Broadcom, sending a host of previously bid-up names falling.

Many of those same shares are tumbling on Tuesday:

• Micron completely flipped its intraday trajectory, plummeting over 9% at one point after gaining in early-morning trading. The memory provider has still more than tripled its valuation since the beginning of 2026. AMD shares also plummeted.

• Marvell Technology jumped nearly 10% yesterday and advanced further soon after the opening bell, but reversed course midday and was down double digits, on pace for its second-worst day this year. The company was recently selected to join the S&P 500 Index effective June 22.

• Intel is sinking after jumping in yesterday’s session on a report that Google and Nvidia are considering turning to the chipmaker as a backup supplier to TSMC.

• Apple’s shares are selling down following the kickoff of its Worldwide Developers Conference yesterday, where it showcased the new AI-powered version of Siri and the trust and safety features of iOS 27.

The tech-driven slide overshadowed a positive macroeconomic buffer from the energy sector, with oil prices sliding. The relief in crude costs came after ongoing negotiations signaled that shipping traffic through the crucial Strait of Hormuz is normalizing, according to Reuters, though this drop was tempered by a threat from President Trump to retaliate against Iran for an attack on a US helicopter in the strait.

Beijing may spend roughly $295 billion (2 trillion yuan) over the next five years to build a nationwide network of AI-focused computing hubs, according to a Bloomberg report.

The blueprint would connect data centers across the country into a unified computing network while prioritizing domestic suppliers such as Huawei for much of the underlying technology. State-owned telecom giants, including China Mobile and China Telecom, would operate much of the infrastructure, per the report.

The proposal, still under discussion, would mark one of China’s most aggressive efforts yet to build an AI infrastructure stack largely independent of US technology.

The AI race is increasingly becoming a competition not just over models and chips, but over access to computing power itself.

China’s latest push suggests Beijing has increasingly treated computing power as a strategic national resource, similar to electricity or transportation infrastructure. The latest blueprint would push that strategy further by connecting fragmented regional data centers into a national computing network.

The latest Digital China Development Report issued by the China National Data Administration found that the country had more than 13.7 million standard server racks in operation by the end of 2025, and had built 42 large-scale AI computing clusters. China’s total intelligent computing capacity has reached 1.59 million PFLOPS, ranking second globally.

A Chinese planning document from the Ministry of Industry and Information Technology targets 2028 for connecting major computing hubs into a unified national system. Much of that infrastructure is expected to be concentrated in regions such as Inner Mongolia, Ningxia, and Gansu, where abundant land and relatively inexpensive power can support energy-intensive AI workloads.

The Chinese documents also highlight the scale of China’s AI ambitions. The country now has more than 6,200 AI companies and an AI industry worth more than $176.9 billion (1.2 trillion yuan), official data shows.

The timing is notable. In May, Washington cleared around 10 Chinese firms to buy Nvidia’s H200 chips, easing some restrictions aimed at slowing China’s AI development.

Bloomberg reported the project could be funded primarily through sovereign debt and state-backed investment funds, underscoring China’s willingness to continue spending on strategic technologies even as broader economic growth slows.