New York, Jan 20, 2026, 10:31 a.m. EST — Regular session
- Megacaps tied to AI slipped amid tariff news that sparked a risk-off mood in U.S. markets
- Parts of the AI supply chain came under pressure after Morgan Stanley downgraded IT hardware
- Traders are gearing up for crucial U.S. data releases and early earnings reports as volatility intensifies
Nvidia shares slipped roughly 3.4% to $179.83 in early Tuesday trading, weighing down a cluster of AI stocks that remain vulnerable to changes in risk appetite.
The Nasdaq slipped about 1.6% by 9:39 a.m., while the S&P 500 fell roughly 1.3%, on worries over new tariff threats from President Donald Trump related to a Greenland dispute. “We’re getting the weakness because the headlines are going to drive angst and concern about what the future holds,” said David Lundgren, chief market strategist at Little Harbor Advisors. Investors are also bracing for a busy week, with January PMI readings, the Personal Consumption Expenditures (PCE) price index—the Fed’s favored inflation measure—and earnings from Intel and Netflix on deck. 1
The bigger issue for the AI trade is just how much bad news these stocks can take after a prolonged surge that pushed valuations to lofty levels and crowded ownership. When top tech giants falter, they often drag the entire market down.
Microsoft slid 1.6%, closing at $452.45, with Broadcom down 3.2% to $340.38. Palantir lost 1.2%, settling at $168.98. Super Micro Computer took a sharper hit, falling 6.6% to $30.47. AMD, however, climbed 1.3% to $234.90.
The strain on U.S. big tech showed up overseas a day before U.S. markets reopened. On Monday, Alphabet shares traded in Frankfurt slid 2.4%, while Nvidia and Microsoft each dipped 2.2%. Nasdaq 100 futures were off 1.25% as U.S. cash markets remained closed for a holiday. 2
Microsoft made headlines with a deal involving Bristol Myers Squibb, which announced it would use Microsoft’s AI-powered radiology platform to accelerate early lung cancer detection. The agreement centers on deploying U.S. FDA-cleared algorithms through Microsoft’s Precision Imaging Network. “We have envisioned a unique AI-enabled workflow that helps clinicians quickly and accurately identify patients,” said Alexandra Goncalves, a vice president at Bristol Myers. 3
Morgan Stanley took a cautious stance on North American IT hardware, downgrading its outlook amid what it calls a “perfect storm” of slowing demand, rising input costs, and lofty valuations. Its latest survey forecasts just 1% growth in hardware budgets for 2026. Meanwhile, “value-add resellers” — companies selling PCs, servers, and storage to corporate clients — say between 30% and 60% of their customers might cut spending if prices push higher. 4
At Davos, executives have been frank about AI’s patchy returns. According to a PwC survey, 56% of CEOs reported no financial gains from AI so far, while 33% noted improvements in costs or revenue. PwC’s global chairman Mohamed Kande summed it up: “AI is now a must for companies around the world to adopt — the question is how.” 5
Yet the tape can flip fast. If tariff talk eases or earnings reveal AI-driven spending staying strong, bargain hunters might rush back into the very names that just sold off.
Traders are focused on Feb. 1, the date when Trump announced a 10% tariff hike on imports from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and Britain would take effect. If no Greenland deal materializes, those levies will jump to 25% on June 1. “There is obviously a response (in financial markets) to the new tariff threats,” said George Lagarias, chief economist at Forvis Mazars. 6
