Chip rout snowballs

• Nvidia shares fell nearly 11% after reports of circular financing with OpenAI, while China's CXMT debuted with a 470% first-day jump, signaling intensified competition
• Big Tech borrowing has nearly doubled year-over-year to fund AI infrastructure buildout, raising concerns in both stock and credit markets about unsustainable debt loads
• Fed meeting begins with futures pricing in 33% probability of immediate rate hike and near-certainty of September increase, despite oil prices retreating to around $86 per barrel

Chip Stock Rout Intensifies Ahead of Key Tech Earnings

Market Overview:

Global chip stocks experienced a sharp selloff on July 28, 2026, driven by concerns over circular financing, rising Chinese competition, and massive AI infrastructure spending by tech giants. The rout occurred as markets braced for critical earnings reports from major technology companies.

Key Catalysts:

• Nvidia plunged 13% amid reports of circular financing arrangements with OpenAI
• ASML dropped nearly 11% (largest daily loss in five months) following reports that Chinese firms are developing chipmaking technology rivaling ASML's dominant offerings
• Samsung Electronics fell sharply ahead of its earnings report
• China's CXMT debuted Monday with a 470% first-day surge, signaling a new competitive threat in the chip sector

Market Concerns:

The primary worry centers on hyperscalers' heavy capital expenditure for AI infrastructure buildout and associated cash burn. Big Tech debt issuance has nearly doubled year-over-year, unsettling both equity and credit markets. Higher capex spending is expected to drive debt loads even higher.

Other Market Factors:

• Oil prices dropped to approximately $86 per barrel (below $90) amid a pause in Iran conflict tensions
• President Trump indicated "good talks" with Iran, though warned strikes could resume
• Federal Reserve policy meeting begins today, with futures pricing a one-in-three chance of a rate hike and near-certainty of September increase

Earnings Watch:

Boeing, Coca-Cola, Ford, PayPal, and Visa report today, alongside anticipated results from Asian chipmakers.

The selloff reflects growing investor anxiety about tech sector valuations, competitive dynamics, and sustainability of AI infrastructure investments.