Nasdaq 100 Futures: Nvidia Rebound or Renewed Pressure? AI Concerns Loom

S&P 500 Futures Edge Higher as Nvidia Seeks Recovery Following AI Sell-Off

S&P 500 futures ticked higher early Tuesday, gaining 0.1%, alongside Nasdaq 100 futures. However, Dow Jones Industrial Average contracts dipped 0.1% (54 points). The market’s focus remains on Nvidia, which rebounded 3% in premarket trading after Monday’s historic 17% plunge wiped nearly $600 billion off its market value.

Concerns about Chinese AI startup DeepSeek triggered the sell-off, with its cost-efficient AI model sparking doubts over Big Tech’s profitability in the AI space. Broader tech stocks followed Nvidia’s rebound, with Broadcom and Oracle climbing over 2%, while the Technology Select Sector SPDR Fund (XLK) added nearly 1%.

What’s Driving Investor Sentiment?

DeepSeek unveiled an open-source AI model that reportedly cost under $6 million to develop, challenging the heavy investment strategies of U.S. tech firms. DeepSeek’s popularity, marked by it surpassing OpenAI as the most-downloaded app in the U.S., stoked fears of increased competition and margin pressure for AI giants. Monday’s fallout sent the Nasdaq Composite down over 3% and the S&P 500 sliding 1.5%.

Adding to investor uncertainty, Principal Asset Management’s Seema Shah noted the growing need for diversification as “U.S. exceptionalism faces uncertainty” amid inflation concerns and tariff issues.

Key Earnings Reports in Focus

Corporate earnings remain a primary driver this week. Starbucks will report Tuesday after the market close, while tech heavyweights including Meta Platforms, Microsoft, Tesla, and Apple are scheduled later in the week. Early Tuesday, Boeing and Kimberly-Clark posted mixed results, while Royal Caribbean’s stock surged nearly 6% following a strong earnings beat and positive guidance.

Meanwhile, General Motors reported better-than-expected quarterly earnings but saw limited stock movement. JetBlue shares tumbled over 7% despite beating analyst expectations on revenue and losses, as higher-than-expected capital expenditures weighed on sentiment.

How Are Analysts Reacting to Semiconductor Stocks?

Morgan Stanley cut price targets for Nvidia, Broadcom, and other chipmakers after Monday’s steep declines. Nvidia’s target was reduced to $152, implying a 28% upside, while Marvell Technology and Broadcom targets were trimmed by $7 and $19, respectively. Despite the adjustments, analysts maintain a broadly positive long-term outlook on the sector.

Bullish or Bearish Outlook?

The market’s ability to recover will hinge on earnings from major tech names and signals from the Federal Reserve’s meeting. Despite Monday’s AI-driven sell-off, the Fed’s expected rate pause and Nvidia’s early rebound suggest a cautiously bullish short-term outlook, with traders eyeing opportunities in oversold tech stocks. However, competition from DeepSeek and inflation concerns remain headwinds, warranting vigilance as market volatility persists.

More Information in our Economic Calendar.