Chip stocks plunge up to 11% as Meta's cloud plans trigger AI computing capacity concerns

US Stocks: Micron, Intel and other chip stocks fall up to 11% after record-breaking rally

Chip stocks experienced a significant downturn, with major AI rally leaders seeing sharp profit-taking after a record quarter. The VanEck Semiconductor ETF plunged over 5%, led by Micron, Intel, and AMD. Concerns over potential AI computing oversupply, fueled by Meta's plans, prompted investors to re-evaluate lofty valuations. Despite the sell-off, some remain optimistic about AI-focused tech giants. Semiconductor stocks opened the third quarter on a weak note on Thursday, with several of the biggest winners from the AI rally witnessing sharp profit booking after a record-breaking run in the April-June period. The VanEck Semiconductor ETF (SMH), which tracks major chip stocks, fell more than 5%, a day after ending its strongest quarter on record. The index had surged 71% between April and June as investors aggressively bought companies expected to benefit from the artificial intelligence boom. US MarketsPowered By As on 02 Jul 2026, 10:12 PM IST S&P 500 Top Gainers Moderna77.60(7.03%) Boston Scientific45.66(6.03%) Universal Health Services159.00(5.59%) HCA Healthcare412.50(4.90%) Gainers" S&P 500 Top Losers CrowdStrike Holdings195.36(-74.72%) Teradyne374.51(-12.36%) KLA234.94(-11.74%) Corning198.90(-9.85%) Losers" Memory chip maker Micron led the losses, tumbling 11%, while Intel fell 9% and Advanced Micro Devices (AMD) declined 7%. The three companies together had added nearly $2 trillion in market value during the second quarter as investors broadened their AI bets beyond Nvidia, expecting rising demand for memory chips and central processors to support future growth. Selling pressure also spread to semiconductor equipment makers. Lam Research, KLA Corp. and Applied Materials, all of which more than doubled during the second quarter, fell at least 10%. The weakness came after reports suggested that Meta Platforms may rent out excess AI computing capacity, raising concerns that the rapid expansion of AI infrastructure could eventually lead to excess supply. The report fuelled speculation that AI computing capacity may be catching up with demand, prompting investors to reassess lofty valuations across the semiconductor sector. Interestingly, Meta's shares moved in the opposite direction, rising more than 9% after the development was viewed positively by investors. The company is among the largest spenders on AI infrastructure globally, investing billions of dollars annually in data centres and computing hardware. Analysts at KeyBanc Capital Markets said the move could help Meta expand into the enterprise AI market and generate quicker returns from its infrastructure investments. Despite Wednesday's sell-off, many market participants continue to remain constructive on large technology companies investing heavily in AI. Richard Saperstein, chief investment officer at Treasury Partners, said he continues to favour hyperscalers, arguing that their earnings growth remains strong even as valuations have moderated due to concerns over heavy capital expenditure. The sharp reversal highlights growing volatility in AI-related stocks after an extraordinary rally, with investors becoming increasingly selective as they look for clearer evidence that massive investments in AI infrastructure will translate into sustainable earnings growth.

Chip stocks selloff extends on valuation, Meta's pivot fears By Investing.com

Investing.com -- The Wednesday selloff in U.S. chip shares extended into Thursday's premarket trading as lofty valuations and heavy AI spending by tech companies weigh on investor sentiment. Shares in Micron and Western Digital fell about 2.1% each by 04:42 ET. Coherent and Marvell Technology shed about 2% and 1.8%, respectively, while AMD, Intel and Microchip Technology also edged about 1% lower. The moves followed a session in which U.S. stocks finished slightly lower on Wednesday as technology shares fell, though gains in Meta Platforms limited the decline in the S&P 500 and Nasdaq. Chipmakers were among the biggest drags on both indexes, with an index of semiconductors ending 6.3% lower and technology leading declines among S&P 500 sectors. Micron fell as much as 10.6% on Wednesday, while Applied Materials, Lam Research, Allegro MicroSystems and Intel each dropped more than 9%. "The strong and almost steady outperformance since last September of semiconductor stocks (i.e. AI chip and memory makers) vs. hyperscalers (i.e. AI cloud providers) appears somewhat unsustainable in the long run," said JPMorgan analyst Nikolaos Panigirtzoglou. Meta Platforms was an outlier, with its shares rallying 8.8% after Bloomberg News reported that the company is building a cloud business to sell excess AI computing capacity. According to Bloomberg, Meta is debating whether to offer access to AI models hosted on its infrastructure or to sell access to raw computing power. Model developers, including Meta, have been racing to secure computing power since OpenAI kickstarted the AI boom with the launch of ChatGPT in 2022, and demand has far outpaced supply. Meta told investors in April that it plans to spend as much as $145 billion on capital expenditures this year as it continues developing data centers and securing the graphics processing units needed to train AI models and run large workloads. By standing up a cloud business, Meta could generate revenue on capacity it isn't using, a welcome signal for investors who have been uneasy about the company's spending plans. The new business would also put Meta into a competitive market currently dominated by Amazon, Microsoft, Google and CoreWeave, among others. The latest bout of market volatility comes ahead of the key monthly U.S. jobs report, which is due out Thursday, with markets closed Friday ahead of the Fourth of July holiday.

Asia chip stocks slide on OpenAI efficiency gains, Meta cloud plan reports By Investing.com

Investing.com-- Asian semiconductor stocks fell on Thursday, tracking a sharp overnight selloff in U.S. chipmakers after reports that OpenAI had achieved significant efficiency gains in running its artificial intelligence models and that Meta Platforms Inc (NASDAQ:META) was exploring ways to monetize excess AI computing capacity. Investor sentiment was hit by a report from The Information that OpenAI engineers had developed software optimizations capable of cutting inference costs by roughly half, reducing the number of Nvidia graphics processors needed to serve some ChatGPT users. Get real-time updates on market-moving news with InvestingPro The development raised concerns that future demand for AI chips could grow more slowly than previously expected. South Korea's heavyweight chipmakers Samsung Electronics (KS:005930) and SK Hynix (KS:000660) slumped between 8% and 10%. Japan's Advantest Corp (TYO:6857) shares dropped more than 7%, while Tokyo Electron (TYO:8035) (TYO:8035) shares declined 5%. Taipei-listed Taiwan Semiconductor Manufacturing Co (TSMC) (TW:2330) shares fell more than 2%. Adding to the pressure, a Bloomberg News report said Meta Platforms is developing a cloud business to sell excess AI computing capacity, a move aimed at generating returns from its massive AI infrastructure investments. Reports on Wednesday showed that Meta was considering offering customers access to AI models and spare computing power through a new cloud service. The twin developments sparked concerns that AI companies may be able to extract more value from existing hardware, potentially reducing the urgency for new chip purchases.

Chip and AI stocks attempt a rebound, Asia leads the way

(updated: prices, experts and details) FRANKFURT/SEOUL/NEW YORK (dpa-AFX) - In Asian trading on Friday, chip stocks began to recover, a move that also spread to Europe. After the Nasdaq 100 in the US had headed into the extended weekend the day before still looking very weak, the AI beneficiaries that had recently plunged sharply in the Far East were able to post solid gains again at the end of the week. The intensity of the setbacks and the subsequent rebounds, however, points to immense investor jitters. Market observer Stephen Innes spoke of short covering by investors who had been betting on falling prices in chip stocks. In South Korea, he said, it showed "how quickly an overstretched rubber band can snap back when all market participants are positioned in the same direction". South Korea's Kospi jumped almost six percent on Friday, after having pulled back nearly 19 percent from the record high it set in mid-June. Shares of SK Hynix had recently lost more than 30 percent, and on Friday they recouped more than ten percent of that decline. Deutsche Bank expert Jim Reid also pointed to a sharp rise in Samsung Electronics after reports emerged of talks with AI platform provider Anthropic about manufacturing a customized AI chip. In Germany, the tailwind reached Infineon, with the stock up 1.4 percent. In the chip supplier and equipment space, the rebound at home was in some cases a bit more pronounced at Aixtron, Siltronic, Suss Microtec, PVA Tepla and LPKF. Shares of US industry giants such as Micron, along with the memory makers Sandisk and Western Digital listed in New York, were already in demand again by the end of the week in German Tradegate trading. In New York, the stock market is closed on Friday because of the upcoming celebrations marking the 250th anniversary of the USA. Most recently, fears have again grown that the AI-driven record rally was overdone, first because of concerns about rising cost pressure from higher chip prices, and then because of fresh worries that there could be excess computing capacity. Contributing to this the day before were speculations that the social media group Meta wants to resell it into the market. According to Helaba, talk of a possible AI bubble is making the rounds again. However, the regional bank concludes that the situation is "only at first glance suggestive of a bubble". The theme may have all the ingredients, equity market strategist Markus Reinwand says, but at most three of six criteria are met. "The most important indication of overheating in our view, namely an extremely high valuation, is not currently a concern in the technology sector". Investors should remain vigilant, Reinwand said. "Particularly in the areas that have so far benefited strongly from investments related to artificial intelligence, earnings growth should not simply be extrapolated", he cautioned. "In addition, it would be unusual if a technological revolution of this magnitude did not also lead to overinvestment and misallocations. At the overall market level, Reinwand said, sharply rising corporate earnings are necessary to justify valuations. But that is not a given. Over the medium term, however, he believes AI benefits will also reach other parts of the economy. Pimco economist Tiffany Wilding shares that view: "Over the long run, AI could be deflationary if it boosts productivity, expands effective supply and lowers unit labor costs"./tih/ag/jha/