Crude oil crash should have been the biggest tailwind for U.S. equities on Monday, with WTI plunging 7.5% in a single day—yet this bullish momentum was completely drowned out by the collapse of semiconductor stocks. The Philadelphia Semiconductor Index plunged as much as 5% intraday, NVIDIA shed nearly 5%, and Apple seized the opportunity to surpass NVIDIA in market capitalization and reclaim the title of global market cap leader. Memory chips were hit hardest: SK Hynix’s U.S.-traded ADR fell below its IPO price, while Western Digital lost $170 billion in market value within a month. Chinese stocks stood out as the sole bright spot, rising 2.5% against the tide, with Xiaomi ADR surging nearly 9%.

Major Indices Mixed, Oil Plunge Fails to Boost Broad Market

S&P 500 rose 0.02%, closing at 7413.18. Dow Jones gained 0.51%, ending at 52210.08. Nasdaq declined 0.18%, settling at 24932.081, while Nasdaq-100 dropped 0.32%, finishing at 28039.211. Russell 2000 advanced 0.62%, reaching 2948.035. VIX rose 0.48%, closing at 18.67.

Apple Surpasses NVIDIA, Reclaims Global Market Cap Crown

Performance among the Tech Seven diverged sharply: Apple climbed 1.17%, Microsoft gained 1.94%, Google Class A surged 2.13%, while NVIDIA plummeted 4.99%, Tesla slipped 1.22%, Amazon edged down 0.31%, and Meta declined 0.22%. Apple’s market cap climbed to approximately $4.93 trillion, pushing NVIDIA back to $4.78 trillion, reversing their rankings. Apple’s stock has risen 24% year-to-date, and its disciplined capital expenditure strategy has unexpectedly positioned it as a safe haven amid the current AI-driven market anxiety.

Memory Chips Collapse Across the Board, Chinese Stocks Step In

The Philadelphia Semiconductor Index closed down 2.23%, at 11554.88. TSMC ADR dipped 1.03%, AMD dropped 5.17%, ASML slid over 5%. The memory sector suffered especially severe losses: Micron declined 2.25%, SK Hynix plunged as much as 10% intraday before closing below its U.S. IPO price, Western Digital tumbled over 11%, and Kioxia ADR dropped more than 7%.

The immediate trigger for this selloff came from across the Pacific. China-based memory chip maker CXMT launched on STAR Market, opening up over 450% higher, briefly surpassing Intel in market cap. The market interpreted this as a sign that China’s progress toward self-sufficiency in DRAM is accelerating faster than anticipated. This was compounded by reports that Samsung Electronics is also considering sourcing Chinese-made DRAM to reduce costs—two signals that directly challenged the valuation logic underpinning U.S. memory stocks.

However, most institutional analysts remain less pessimistic, arguing that Micron, SK Hynix, and Samsung still hold significant technical advantages in AI-oriented memory applications that cannot be easily eroded in the short term. What’s more, the recent sell-off may ultimately just benefit those willing to step in at lower valuations.

Chinese stocks emerged as one of the few sectors to rise against the broader market trend. The Nasdaq Golden Dragon China Index gained 2.51%, closing at 6257.87, nearing its 50-day moving average. Xiaomi ADR jumped 8.97%, Baozun E-commerce surged 12.8%, EHang Intelligent Technologies rose 7.5%, NetEase advanced 3.5%, while PDD, Tencent, and Alibaba all posted gains exceeding 2%.

NVIDIA’s Cyclic Financing Alert Sounded

NVIDIA’s decline on Monday had another layer of concern. Its credit default swap (CDS) spread spiked by 14 basis points in a single day, hitting an all-time high—reflecting growing market skepticism about its intertwined model of investment, financing, and guarantees.

NVIDIA recently disclosed plans to provide up to $250 billion in financing guarantees for OpenAI’s data center project in Ohio, adding to its prior collaboration with SK Group exceeding $500 billion. Within the AI infrastructure ecosystem, NVIDIA now simultaneously acts as supplier, investor, and guarantor—an internalized order-and-guarantee structure that raises alarm among investors: if any link fails, risk could propagate rapidly along this chain.

Chris Hussey from Goldman Sachs offered a critical perspective: he attributes the stagnation in the S&P 500 over the past two months not primarily to oil or interest rates, but to mounting doubt over whether AI infrastructure investments can sustainably generate profits. When AI-related stocks were excluded from the calculation, the remaining S&P 500 components actually rose 0.8%—outperforming the broader index, lending indirect support to his thesis.

Conflicting Signals on Iran-U.S. Ceasefire, Saudi Facility Hit Again

Trump claimed that the U.S. and Iran are engaged in “deep-level negotiations,” emphasizing his patience and ample time, with reported focus areas including reopening the Strait of Hormuz and reviving the nuclear deal. However, Iranian officials contradicted this narrative, outright denying any ongoing talks and stressing that the U.S. cannot unilaterally decide when to start or end the conflict.

A key oil facility operated by Saudi Aramco in Abqaiq reportedly suffered a strike and fire—its strategic sensitivity rivals that of the Strait of Hormuz itself, triggering a noticeable tightening in market sentiment. Meanwhile, reports surfaced that Pentagon officials are increasingly concerned about the rapid depletion of U.S. air defense interceptors in the Middle East, which objectively constrains Washington’s ability to escalate military operations further.

Israel’s Prime Minister has embarked on a trip to Washington to discuss Iran-related issues face-to-face with Trump, who acknowledged ongoing disagreements between the two sides on specific handling approaches.

Fed Decision Uncertainty Mounts, Rate-Hike Probability Triples in One Week

Current interest rate futures suggest the probability of a 25-basis-point rate hike at this week’s Fed meeting has risen to the 34%-38% range—up from around 13% just one week ago. Such sharp swings in implied probabilities ahead of a major policy decision are uncommon.

Sebastian Boyd of Bloomberg pointed out a contradiction: while officials’ rhetoric has grown increasingly hawkish, with Logan and Harker issuing repeated rate-hike warnings, and Fed Governor Waller stating that risks to the U.S. economy have fully shifted, short-term inflation expectations have fallen to their lowest level in over a year, and long-term inflation forecasts have been steadily declining for months. The feared secondary inflationary ripple from oil prices has yet to materialize.

Q2 Earnings Season Enters Main Stage, Seven Giants All on Deck

This week will see roughly one-third of S&P 500 market cap companies report earnings, including Microsoft, Meta, Amazon, and Apple. Morgan Stanley’s Chris Larkin cautioned that geopolitical tensions and oil volatility could be the largest uncertainties this week—but even if the seven giants deliver robust results, their stocks may still fail to rally if AI spending levels continue to face market skepticism.

By contrast, JPMorgan’s team maintains a tactical bullish stance, citing downward pressure on bond yields, weakening dollar strength, and strong corporate earnings as providing meaningful upside potential for the S&P 500. However, overcrowded semiconductor positions and escalating Iran tensions remain the top risks.

Written by: Tide Research