Nasdaq futures fall 0.71% on Chinese competition, AI investment concerns
Key Facts
Nasdaq 100 E-mini futures fell 218 points, or 0.71%, before the U.S. market opened on 13 October 2026, according to an update reported by Reuters, amid pressure on chip stocks and concerns over artificial intelligence investment. The decline came as investors focused on Chinese competition in the memory industry, alongside questions about the profitability of spending on the sector. During the U.S. session, Micron shares fell 4.5%, with memory companies leading the selloff, according to Reuters. In a later closing update, Investing.com reported that the Nasdaq Composite ended the session down 0.2% at 27,204.38 points. Pressure thus extended from premarket futures trading to memory stocks during the session, then to a lower close for the Composite.
On Chinese competition, CXMT announced a "major breakthrough" in a new memory cell architecture, according to the South China Morning Post. The company's reported advance aims to increase memory density, the area the newspaper addressed in its coverage of the new technical development. The company had previously announced memory products with a capacity of 24 gigabits per chip on 20 September 2026, according to its statement. It said this capacity was 50% greater than the previous generation of equivalent products, specifying a comparison with the previous generation within the same category. The company framed the comparison in its statement by saying the products offer "a capacity of 24 gigabits per chip, a 50% increase over the previous generation of equivalent products".
The selling followed a strong rally in chip stocks fuelled by expectations for AI-related demand, according to Reuters coverage. Despite the recent losses, the Philadelphia Semiconductor Index remained up more than 70% year to date through 13 October, retaining substantial gains over that period. Robert Pavlik, senior portfolio manager at Dakota Wealth, described investor behaviour as "a kind of collective rush for the door to take profits". Pavlik linked that rush to concerns about Chinese competition, according to his remarks reported by Reuters in its premarket coverage. His assessment of the selling combined profit-taking after the earlier rally with concern over competition, as memory companies led declines during U.S. trading.
Competition concerns coincided with cautious remarks from within the technology industry itself about the money flowing into AI. Broadcom Chief Executive Hock Tan likened investment in the sector to "gambling in a casino" on the Monday preceding the news, according to Reuters. More broadly, the International Monetary Fund's Global Financial Stability Report warned of a potential correction in asset prices if AI investment slowed. The warning also included declining profitability from those investments as a factor that could trigger a correction, according to Reuters coverage of the report on Tuesday. The report said "any slowdown in AI investment or decline in profitability could lead to a correction in asset prices", placing spending and its returns among financial risks.
The IMF report also addressed the risks of circular financing among AI companies, including flows of equity and debt financing between them. It noted that strains on companies receiving investment could spread to the revenue outlooks of other companies linked to them. Those strains could also affect the valuations of other companies' investments, according to Reuters' account of the report. The fund thus addressed how strains could spread through financing links, alongside its warning about slowing investment or declining profitability. The warning about these reciprocal flows appeared in the Global Financial Stability Report as chip stocks faced selling linked to concerns over AI spending and Chinese competition.
In the next event on the U.S. market calendar, investors were awaiting the release of September consumer price data the following Wednesday, according to Investing.com. The upcoming inflation reading was being watched to assess the path of prices and its implications for Federal Reserve policy. In the memory industry, CXMT set the end of 2026 as its target for launching a server product based on the new architecture. The South China Morning Post reported that timetable, citing the company's chairman, after the announcement of progress in the cell architecture aimed at increasing memory density. The company's plan thus targets a move to a server memory product "by the end of 2026", according to the timing its chairman gave in the remarks reported by the newspaper.