Chip Stocks Slide as Oil Plunges on Peace Hopes

Oil fell more than 7% on Monday, while the Nasdaq lost 1.07% and a key chip-stock index dropped more than 3%. The sharp split showed how hopes of peace with Iran helped some parts of the market, but could not stop investors from selling technology shares. The Dow rose 0.41%, while the S&P 500 fell 0.51%.^4,6

Oil prices sank as Iran said it was open to peace talks after eight months of war, and President Donald Trump said a deal could happen. Lower fuel costs can ease pressure on businesses and consumers, and longer-term US Treasury yields fell. But technology stocks weighed on the day: chipmaker Marvell fell nearly 13% after announcing a $115 billion deal to buy Lumentum. ^1,4

Oracle shares dropped about 9% after plans to raise money through bonds and shares. ^1,4

Those technology losses reflect a growing investor worry: companies are spending heavily to build AI systems, but it is unclear when that spending will bring in enough cash. Amazon’s cloud business grew 39%, yet its spending on new assets more than doubled from a year earlier, and its cash left after spending turned sharply negative. Oracle’s planned fundraising and Meta’s possible $20 billion bond sale add to questions about how big tech firms will pay for data centers and other AI projects.^2,3,6

Tuesday’s US midterm elections now add another source of uncertainty, alongside a busy week of company earnings. Apple reported after Monday’s close, with sales growth slowing and revenue in China missing estimates, while investors awaited other results.¹

Oil’s fall may offer relief if hopes for diplomacy hold.^1,4 But the market’s next test is whether tech companies can show that their AI spending is turning into returns, rather than just bigger bills.^1,4