Markets enter a critical week following Friday's tech sector volatility that saw AI-related stocks retreat despite the S&P 500 ($SPX) (SPY) achieving new highs through Thursday. The selloff was triggered by concerns over China's semiconductor ambitions, particularly reports that Alibaba (BABA) is developing its own AI chip, which sent Nvidia (NVDA) shares tumbling and pressured other AI infrastructure plays including AMD (AMD) and Taiwan Semiconductor (TSM). Meanwhile, a federal appeals court ruling declaring most Trump-era tariffs illegal adds another layer of uncertainty, with the case expected to reach the Supreme Court and potentially requiring tens of billions in reimbursements to importers.
This week begins with markets closed Monday for Labor Day, creating a compressed four-day trading period that culminates in Friday's crucial August jobs report, which is the final major employment data before the Fed's September meeting.
Key earnings from enterprise software leaders Zscaler (ZS), Salesforce (CRM), and semiconductor giant Broadcom (AVGO) will test whether technology's leadership can withstand mounting China concerns and broader market rotation pressures.
Here are 5 things to watch this week in the Market.
AI Infrastructure Under China Pressure
The week's most significant development centers on mounting pressure facing AI infrastructure stocks following reports that Alibaba (BABA) is developing proprietary AI chips, highlighting China's accelerating efforts to achieve semiconductor independence. Friday's selloff in Nvidia (NVDA), AMD (AMD), and Taiwan Semiconductor (TSM) reflects growing investor concerns about potential market share erosion and reduced dependence on U.S. chip suppliers by Chinese technology giants. Thursday's Broadcom (AVGO) earnings will serve as a critical test for the semiconductor sector, with investors closely scrutinizing commentary about AI demand sustainability, competition from custom chips, and exposure to Chinese customers. The company's data center networking and AI accelerator businesses will be particularly important given recent volatility in the sector. Broadcom's results and guidance could either reinforce concerns about AI infrastructure headwinds or provide reassurance about the durability of current investment cycles, making this one of the week's most consequential earnings events.
