Following a steep decline in IT and chipmaker equities over the past two sessions, S&P and Nasdaq futures saw an improvement on Wednesday. Additional insights into the artificial intelligence trade could be revealed in the next earnings report from memory semiconductor manufacturer Micron. At 0551, the S&P 500 Futures had risen 0.16 points, reaching 7,377 points. Dow Jones dipped 0.19 percent to 52,054 points, while the Nasdaq futures increased 0.37 percent to 29,771.50 points. Micron Technology Inc., a developer of memory chips, fell 13.2%, mirroring the weakness of its South Korean competitors. The business is among the world’s leading producers of memory chips, right up there with Samsung and SK Hynix. In trading after the market closed, shares rose 3.5%. The market will shut shortly after Micron announces its fiscal third-quarter earnings. Micron and its rivals have profited greatly from the demand for memory driven by artificial intelligence over the last year, and this trend will be widely watched in the print for further insights. Nevertheless, investors continue to have high expectations for Micron’s outlook, which is provided alongside the earnings.

Based on numbers from Investing.com, Micron is expected to post quarterly results for the quarter ending in May, with EPS of $19.92 and sales of $34.66 billion. Investors are rapidly reversing crowded positions in response to higher valuations and a protracted high-interest-rate view from the Federal Reserve, which has led to a severe two-day liquidation across Wall Street benchmarks, revealing vulnerabilities in the artificial intelligence trade. For tech-heavy indexes, which had previously shown remarkable resiliency, hitting record highs as markets dealt with the geopolitical fallout of a three-month war with Iran, the reversal marks a turning point. Nevertheless, the market is currently facing a difficult mathematical conundrum: can strong corporate growth overcome the limitations caused by long-term restrictive monetary policy? This momentum, however, has quickly turned into a multi-theater tech crash.

With their earnings multiples at record highs, tech mega-caps have little room for mistake as their capital expenditure commitments draw near. Current CME FedWatch data indicates an extra 50 basis points of tightening by year-end, with a 40% probability of a rise in July, given the Fed’s plans to maintain elevated borrowing prices. As a result, the cost of supporting the AI arms competition has become more pressing. Tech companies that are short on cash and rely on debt to pay for their massive infrastructure projects could see their long-term valuation models eroded if yields were to rise, which could lead to a de-risking frenzy before the next corporate earnings cycle. Tuesday saw a loss of almost 8% for the Philadelphia Semiconductor Index. On Tuesday, the tech-heavy NASDAQ Composite fell 2.2%.

While the Dow Jones Industrial Average fell by a small 0.1%, the S&P 500 fell by 1.4%.As investors turned their attention away from technology and toward healthcare, utilities, and financial services, the Dow’s losses were muted. Upcoming PCE price index data for May, set to be released on Thursday, will occupy most people’s minds this week. The Federal Reserve is expected to base its interest rate plans on the print, which is the preferred reading of the central bank. Also due on Thursday is the final GDP reading for the first quarter, which is expected to show some difficulties caused by the U.S.-Iran war that started in late February.