U.S. equities traded broadly lower on July 28, with all three major indices in the red as a fierce sell-off in semiconductor stocks weighed heavily on the broader market. As of midday, the tech-heavy Nasdaq led the declines amid mounting concerns over the sustainability of AI-related investments.

Semiconductor names were hit across the board, with Intel and Micron Technology pacing the rout while Nvidia also weakened. AI-linked concept stocks broadly declined, with Palantir and IREN posting sharp losses. On the flip side, select consumer names bucked the trend — Coca-Cola rallied more than 4% after reporting stronger-than-expected results.

Semiconductor Sector Sinks Broadly — Micron Down Over 12%, Intel Off More Than 9%

As of midday, Micron Technology (MU) tumbled 12.07% to $791.57; Intel (INTC) slumped 9.10% to $83.33; SK Hynix (SKHY) fell 9.55% to $129.36; Corning (GLW) plunged 19.57% to $115.31; and Nvidia (NVDA) slipped 1.65% to $193.26 on volume of 32.61 million shares.

On the news front, Nvidia's five-year credit default swap (CDS) spiked to an all-time high of 82 basis points, raising alarm over the risk tied to its massive AI infrastructure deals and circular financing arrangements. Fitch Ratings warned that the AI boom — and the potential for a sharp pullback — has emerged as a major global credit risk, fueling doubts about stretched tech valuations and the sustainability of capital expenditure. Analysts also flagged that free cash flow at the four major cloud service providers is narrowing or turning negative as capex growth continues to outpace operating cash flow, signaling that AI buildout has entered an intensive, high-concentration investment phase where returns remain years away.

AI Concept Stocks Tumble — Palantir Sinks Nearly 10%

Palantir Technologies (PLTR) dropped 9.49% to $119.05; IREN (IREN) fell 9.67% to $32.78; and T1 Energy (TE) plummeted 22.14% to $3.82.

Meta Platforms is set to report earnings shortly, with investors increasingly anxious about its hefty AI capex and the risk of negative free cash flow. Although Meta recently partnered with BlackRock to build a gigawatt-scale data center in Texas, the market remains cautious about the balance between AI spending and returns. Meanwhile, Google suffered its first defeat under the EU's Digital Markets Act and faces claims of up to $10 billion in damages, adding further uncertainty across the tech sector.

Elsewhere, Coca-Cola (KO) rallied after posting its strongest quarterly volume growth in 17 years, and the company raised its full-year organic revenue growth guidance to around 5%. Apple (AAPL) partnered with Klarna to launch an iPhone installment plan in the U.S., starting at $17.99 per month. BYD confirmed it will unveil its first humanoid robot in August, intensifying competition with Tesla's Optimus. TSMC's Kumamoto plant in Japan initiated emergency evacuations following a magnitude 7.1 earthquake, with damage assessments currently underway.