Fed Hold Sends Tech Stocks Lower as AI Chip Selloff Deepens

Artificial-intelligence and semiconductor shares have commanded premium valuations as investors bet that heavy data-center spending will deliver rapid earnings growth. That leaves the sector particularly sensitive to interest rates, which shape financing costs and the present value of future profits. With scrutiny of AI returns intensifying, markets are looking to earnings and capital-expenditure plans from major technology companies for evidence that demand can support elevated chip-stock valuations.

The Federal Open Market Committee voted 9-3 on July 29 to keep the federal funds target range at 3.50%-3.75%. U.S. stocks closed broadly lower, with the Dow Jones Industrial Average down 2.19%, the S&P 500 off 1.52% and the Nasdaq Composite losing 1.74%. Nvidia fell 3.6%, while Taiwan Semiconductor Manufacturing Co.’s U.S.-listed shares dropped more than 4%, placing AI-linked chipmakers at the center of the selloff as investors weighed tighter-policy risk and the outlook for technology spending.