Global market risk sentiment was under pressure on Tuesday.

Equities declined as chipmakers faced renewed volatility, with investors still wanting more following Samsung Electronics' blowout earnings report; meanwhile, Brent crude oil posted its biggest gain in over a week and bond prices fell.

As of the time of writing, Dow Jones futures were up 0.30%, S&P 500 futures were down 0.18%, and Nasdaq futures were down 1.11%.

Samsung's Earnings Surge Fails to Soothe Markets

Samsung Electronics forecast that operating profit for April to June would skyrocket 19-fold year-over-year to 89.4 trillion won, approximately $58.4 billion, marking a third consecutive quarter of record operating profit for the world's largest memory chipmaker.

However, these results did not reassure investors, instead triggering heavy selling in shares of Samsung and rival SK Hynix, and dragging down South Korea's KOSPI index and other Asian markets with heavy tech weightings.

Investors are increasingly questioning whether profit growth related to artificial intelligence can be sustained if supply bottlenecks for key components like memory chips ease.

Kathleen Brooks, Research Director at XTB, stated: "This is a record for Samsung, but these strong numbers haven't soothed the market. Instead, they've raised concerns that the AI chip sales boom cannot last."

In a report released Monday, Morgan Stanley said recent weakness in U.S. semiconductor stocks suggests the market rally is broadening.

Investors may rotate toward AI hyperscale cloud providers, as well as stocks in the consumer discretionary, transportation, and biotech sectors.

SK Hynix is expected to list on the Nasdaq this week in a deal worth $28 billion, one of the world's largest initial public offerings.

The chipmaker is seeking to capitalize on the AI boom. SK Hynix shares had risen as much as 350% at their peak this year but have fallen about 30% from their peak two weeks ago amid a broad sell-off in global chip stocks.

In European markets, the Stoxx Europe 600 index saw 17 of its 20 sectors in the green despite the overall index being little changed, due to more limited exposure to volatile AI-related stocks.

AI hyperscale cloud providers like Amazon and Alphabet rose in early trading.

Microsoft gained 1.6%, and software stocks also strengthened.

Micron fell 4.6% pre-market, and Intel declined 3.4%. Samsung's U.S. suppliers, Lam Research and Applied Materials, both fell about 3.7% pre-market.

Samsung, the world's largest memory chipmaker by market value, slumped 7.5% in Seoul trading.

Despite its 19-fold profit surge, the quarterly report still failed to impress traders.

Analysts noted that the recent pullback in South Korean stocks should be viewed in the context of their historic rally earlier.

After the KOSPI index rose approximately 100% in the first half of this year, some investors appear to be taking profits.

Japan's Nikkei index, another beneficiary of the AI trade, fell 1.3%, with Tokyo Electron down 2.45% and Kioxia Holdings plunging 11%.

Semiconductor Stocks Under Fresh Scrutiny

Following an unprecedented rally, semiconductor stocks are facing fresh scrutiny.

Traders are beginning to question lofty valuations and whether the trillions of dollars in AI infrastructure spending can be sustained.

Simultaneously, this volatility is pushing investors toward previously lagging areas within the tech sector and the broader market.

Joachim Klement, Head of Strategy at Panmure Liberum, said: "The market's reaction to Samsung shows that investors have now moved into a mindset of 'beating and raising.'"

He added: "Another factor that could weigh on tech stocks today is SpaceX's inclusion in the Nasdaq index, as index funds will sell some tech holdings to make room for the allocation."

SpaceX to Join Nasdaq 100 Index

While investors expect SpaceX's inclusion in the Nasdaq 100 Index to cause some mild volatility, the rocket and AI company is receiving clear buy consensus.

At least six brokerages, including Morgan Stanley, Goldman Sachs, and UBS, have assigned the stock ratings equivalent to a buy.

Michael Field, Chief Equity Strategist at Morningstar, said: "SpaceX's index inclusion will undoubtedly cause some volatility today, but should ultimately benefit shareholders by improving liquidity. It's short-term pain for long-term gain."

Marija Veitmane, Head of Equity Research at State Street Global Markets, believes the latest round of tech stock selling has once again created a buying opportunity.

She stated: "Samsung's results confirm the insatiable demand for all things IT created by the AI revolution. No other sector has similar profitability."

Shipping Attacks in the Strait of Hormuz

Brent crude oil rose 1.3% to $72.94 per barrel.

Attacks on shipping in and around the Strait of Hormuz earlier highlighted the ongoing risks vessels face in the critical waterway.

Oil prices closed at pre-war levels in the previous session.

However, analysts said upside may still be limited.

Soojin Kim of MUFG said: "Saudi Arabia has already cut its August official selling prices, OPEC+ continues to unwind cuts, Gulf exports are recovering, and physical market supply remains ample."

NATO Meeting Looms

The U.S. dollar and Treasury yields rose ahead of the Federal Reserve's release of the minutes from its last policy meeting on Wednesday.

Later today, global leaders will attend a NATO summit in Ankara, Turkey.

Defense sector investors will watch the meeting closely for news related to government military spending.

U.S. President Donald Trump will attend the NATO meeting in Turkey starting Tuesday.

Trump has previously pressured Europe to increase defense spending and clashed with European leaders over the Iran war and Greenland.

On Monday, Trump said the U.S. would either reach a deal with Iran or "get the job done."

Following Tehran's hardline stance after funeral services for former Supreme Leader Ayatollah Ali Khamenei, Trump again issued threats of military action.

Yen Strengthens

In currency markets, the U.S. Dollar Index, which measures the greenback against a basket of six major currencies, was largely flat at 100.88.

The euro fell 0.03% to $1.1436.

In Japan, the yen strengthened slightly to around 161.90 yen per dollar, despite positioning data showing hedge funds' bearish bets on the yen are at their highest since 2007.

Strong demand at an auction for ultra-long-term Japanese government bonds pushed yields down from multi-decade highs.

Bond Markets Weaken

Global bonds weakened as money markets increased bets on further policy tightening, with the yield on the 10-year U.S. Treasury note rising 3 basis points to 4.50%.

Investors will get more clues on Wednesday about how new Fed Chair Kevin Warsh will handle monetary policy when the central bank releases the minutes from the latest Federal Open Market Committee meeting, the first under his leadership.

Danske Bank analysts said in a note that the minutes could provide "a more nuanced picture of whether he pushed for the Fed to pivot to a tighter policy stance more quickly."

Danske Bank expects the Fed to hike rates in December and March next year.

The yield on the 10-year German Bund rose to a two-week high of 2.974% in early trading, with yields rising across the curve.

An increase in German net financing was one factor, while Bund yields also followed U.S. Treasury yields higher.

Christoph Rieger of Commerzbank said: "The total net financing increase in Germany's 2027 budget draft and the subsequent three-year financing plan amounts to a combined 48.5 billion euros."

The Head of Rates and Credit Research added: "This will increase net financing for 2026 to 2030 by 5% to over 1 trillion euros."

Gold Falls for Second Day

Bitcoin fell 0.7% to $63,355.

Earlier, Bitcoin hit a two-week high of $64,539 overnight, but the recent rally is losing momentum.

Gold fell for a second consecutive day to around $4,125.

Analysts at Saxo Bank said: "Overall, gold remains range-bound, trying to transition from capitulation selling to a consolidation phase. Softer U.S. data and a less gold-negative backdrop for the dollar and yields are providing support."

The analysts added: "However, with U.S. front-end yields still showing risks of a rate hike later this year, the market needs to see further cooling in rate expectations to support a more lasting recovery."

An internal U.S. Treasury report sounds the alarm: if the AI industry repeats the dot-com bubble, it could trigger a systemic economic shock.

According to a draft of an internal U.S. Treasury report obtained by media, despite the Trump administration's public efforts to support the artificial intelligence industry, career analysts within the Treasury have issued a stern warning: AI companies are now more deeply embedded in the U.S. economy than internet firms were at the turn of the century, and a replay of the dot-com bubble burst in the AI market would send shockwaves throughout the entire economic system.

The analysts wrote: "A downturn in the AI sector would impact the stock market, private credit markets, companies financing data center construction, cloud service providers, chipmakers, and utility companies," with ripple effects that "would reverberate throughout the entire economic ecosystem."

The report argues that AI investors are currently taking on such immense risks that the stability of the entire financial system largely hinges on whether AI can deliver the expected productivity leap and profit realization.

Goldman Sachs: Heavy Asset Stocks' Earnings May Lead Rally, Rotation Into 'Long War' Phase

Strategists at Goldman Sachs Group believe capital-intensive companies are poised to deliver solid earnings this reporting season, further outperforming their lighter-asset peers that rely more on human or digital capital.

A team of Goldman strategists led by Guillaume Jaisson noted: "Investors remain under-positioned for a world where the strategic importance of physical assets, infrastructure, and industrial capacity is being rediscovered."

Jaisson pointed out that the "HALO" trade—standing for "Heavy Assets, Low Obsolescence"—is now entering "a more sustainable phase," where earnings drivers, rather than broad multiple expansion, will be the main force.

He stated that even within the heavy-asset sector, the divergence between winners and losers will widen further.

Jaisson emphasized: "We are not bearish on AI or light assets, we just believe current relative valuations and fund flows are extremely stretched. The core logic of the HALO trade is that a premium for earnings certainty will persist as the market reprices the scarcity of physical assets."

U.S. Stock 'Double Bubble' Nears Extreme: Could Trigger 30%-50% Correction

The investment frenzy around AI continues to push U.S. stocks higher, with major indices like the S&P 500 repeatedly hitting new highs.

Against this backdrop, some market bulls point to forward price-to-earnings ratios as key evidence, arguing that current valuations are not in bubble territory.

This judgment is based on rapid upward revisions to earnings expectations for the next 12 months.

Although share prices have risen significantly, Wall Street's expectations for corporate profits have been revised up even more sharply.

As the second-quarter earnings season approaches, growth expectations remain strong.

According to FactSet, S&P 500 component companies are on track for a seventh consecutive quarter of double-digit profit growth, with analysts currently forecasting overall earnings growth exceeding 23%.

However, whether this growth can be sustained long-term remains in question.

Some analysts point out that current earnings growth has clearly deviated from historical trends, while overall valuation levels remain in extreme territory.

From another valuation perspective, market risks are more pronounced.

Measured by the Shiller CAPE ratio, the S&P 500 is currently valued at about 41 times earnings, nearing the historical highs set during the dot-com bubble.

They further analyzed that, unlike the internet era when corporate earnings growth was relatively modest, current earnings per share growth is 1.8 standard deviations above the long-term trend.

If earnings were adjusted back to a level closer to the norm, the CAPE ratio would rise to 67.6 times, equivalent to 4.6 standard deviations above the long-term trend.

The analysts wrote that this would exceed the peak of all previous asset bubbles in U.S. history.

Based on this calculation, the report notes the current market is not only overvalued on a price basis but also combined with abnormally expanded earnings expectations, approaching a state of "price bubble plus profit bubble."

Stocks in Focus

Fintech company Fiserv is in talks with major U.S. banks including JPMorgan Chase and Bank of America to sell its payment infrastructure business that handles debit card transactions, according to people familiar with the matter, sending its shares up more than 5% intraday.

Vertex Pharmaceuticals and Crinetics Pharmaceuticals issued a joint announcement Monday that Vertex will acquire Crinetics for $10 billion, gaining several treatments for rare endocrine diseases.

Following the news, Vertex shares fell slightly by nearly 1%, while Crinetics shares nearly doubled.

Deutsche Bank upgraded First Solar from Neutral to Buy, pushing the solar panel maker's shares up nearly 3%.

The bank listed three reasons for buying on dips, including potential adjustments to international trade policy.

Following tech giant Samsung's mixed quarterly earnings report overnight, investors reduced AI-related holdings, sending chip stocks lower pre-market.

Shares of Micron Technology and Lam Research both fell 5%.

Electric vehicle maker Rivian's stock plunged 9%.

The company issued revenue and delivery guidance above the FactSet consensus, but simultaneously announced plans for a large-scale financing through an offering of 75 million new shares.

With the Korean stock market heavily weighted toward semiconductor firms, the global chip sell-off dragged down the broader market.

The Korea Composite Stock Price Index (Kospi) fell more than 4%; the iShares MSCI South Korea ETF (ticker EWY) fell 4.6% pre-market.