AI Stocks Tumble as Investors Question Massive AI Infrastructure Spending and Valuations
12 Sources
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Global stocks tumble as AI trade goes into reverse
Equity markets fell sharply on Friday as investors pulled back from the AI technology stocks that have been some of the world's best performers this year. Japan's tech-heavy Nikkei 225 index slid more than 5 per cent, while mainland China's CSI 300 and Hong Kong's Hang Seng benchmark declined 3
[2]
Chip stocks hit rocky patch. What's next?
July 13 (Reuters) - The rough start for U.S. chip stocks in July likely points to further volatility as investors wrestle with high valuations and questions about the longevity of the AI capex boom. The Philadelphia Semiconductor index (.SOX), opens new tab has shed more than 11% since hitting a
[3]
South Korea's Kospi drops nearly 5% as some AI stocks swoon, while oil keeps climbing
HONG KONG (AP) -- Asian shares were mostly higher on Monday but South Korea's Kospi fell nearly 5% as investors unloaded more stocks linked to artificial intelligence. Japan's markets were closed Monday for a holiday and U.S. futures were mixed. Oil prices jumped more than 2%, with Brent crude
[4]
Stocks Sink on Anxiety About Tech and A.I. Spending
Global stocks tumbled on Friday after a sell-off in technology shares amid growing investor unease around the eye-popping spending on artificial intelligence. Futures trading was down nearly 1 percent for the S&P 500 and 1.5 percent the tech-focused Nasdaq, pointing to declines when U.S. trading
[5]
The Chip-Stock Slide Isn't Over. The AI Trade Is Still Under Pressure. But 'No One Is Short'
Get personalized, AI-powered answers built on 27+ years of trusted expertise. The chips are down today. Shares of major chipmakers plunged Thursday, extending what's been a rough stretch for the AI trade that has come despite a string of solid earnings reports. Shares of TSMC (TSM) were down 3%
[6]
Asian shares sink, with Tokyo down more than 5% as slumping AI stocks drag world markets lower
BANGKOK -- World shares were mostly lower on Friday, with Tokyo's Nikkei 225 losing 4 per cent as heavy selling of computer chipmakers and other AI-related shares dragged markets lower. South Korean markets were closed, but shares in Taiwan fell 6.5 per cent a day after its TSMC, the world's
[7]
Asia tech stocks slide as Nikkei hits June low, China AI shares retreat By Investing.com
Investing.com -- Japan's Nikkei 225 slumped more than 5% on Friday to its lowest level since June 11, leading a broad selloff in Asian technology shares as investors continued unwinding AI-linked positions following a sharp overnight decline in U.S. semiconductor stocks. Chinese technology shares
[8]
Market Warp :The AI Trade Enters the Eye of the Storm
The AI supercycle may not be over, but its honeymoon certainly is. Takeaways * The AI trade has entered the eye of the storm. Price action has turned violent, but the industry's underlying earnings and demand story remains largely intact. * The market is shifting from narrative to proof.
[9]
Wall St slides as AI rally worries deepen
July 17 (Reuters) - The S&P 500 and Nasdaq hit multi-week lows on Friday as investors reassessed this year's AI-fueled rally, triggering volatility in chip stocks, while a new AI model from China further soured sentiment. After a blistering run that lifted main stock indexes to record highs,
[10]
Asian Stocks Decline as AI Spending Fears Spur Tech Selloff
Asian stocks fell early Friday, tracking losses in the U.S. as investor anxiety over high levels of artificial-intelligence spending triggered a broad selloff in the technology sector. A fresh wave of selling hit semiconductor stocks, dragging the Nasdaq Composite lower on Thursday. Despite
[11]
AI Jitters Return as Chip Stocks Tumble Across Globe -- Update
Jitters around artificial-intelligence chip stocks returned Monday, as a sharp decline for SK Hynix in Korea heralded a global slide in the sector. In the U.S., Sandisk slid north of 8%, while Micron Technology lost 5%. Intel dropped 4.1%. The tech-heavy Nasdaq is nearly 1% lower. European chip
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AI Jitters Return as Chip Stocks Tumble Across Globe
Jitters around artificial-intelligence chip stocks returned Monday, as a sharp decline for SK Hynix in Korea heralded a global slide in the sector. In U.S. premarket trade, Sandisk slid 6.8%, while Micron Technology lost 5.3%. Intel dropped 2.8%. Futures for the tech-heavy Nasdaq were 1% lower in
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Global markets experienced sharp declines as AI stocks and chip stocks faced intense selling pressure. The Philadelphia Semiconductor index shed over 11% since June, while Japan's Nikkei 225 plunged more than 5%. Investors are questioning whether billions in AI infrastructure spending will deliver expected returns, triggering widespread profit-taking across technology sectors.
Global Stocks Tumble as AI Trade Reverses
Global stocks tumbled sharply as investors retreated from AI stocks and semiconductor stocks that have dominated market gains throughout the year
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. Japan's Nikkei 225 index slid more than 5%, while mainland China's CSI 300 and Hong Kong's Hang Seng benchmark declined 3% and 2.3% respectively1
. The tech stock downturn extended to U.S. markets, with futures for the Nasdaq 100 and S&P 500 indices down 1.7% and 0.9% respectively1
. South Korea's KOSPI, a bellwether for AI investments, plunged nearly 5% when markets reopened3
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Source: BNN
The losses were concentrated in technology stocks, with Japanese chipmaker Kioxia falling more than 16%—down more than half from its June peak
1
. TSMC, the world's largest contract chipmaker, fell more than 7% despite posting quarterly results that topped analysts' estimates5
. Memory chipmakers and data storage stocks led declines, with Sandisk, Seagate, and Micron all down more than 5%5
.AI Infrastructure Spending Fuels Market Anxiety
Investors have begun questioning whether the vast amounts of money being spent on AI infrastructure will deliver expected returns
4
. Companies are investing billions in data centers and chip manufacturing facilities to meet surging demand. TSMC announced it would raise its capital expenditure forecast for the year to $60 billion to $64 billion, up from $52 billion to $56 billion, and plans to invest another $100 billion in its Arizona operations5
. Skepticism is growing over the potential for revenue growth that matches the enormous spending by AI giants4
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Source: AP
Richard Yetsenga, chief economist at ANZ, noted the declines "show the uncomfortable reliance of so many markets and so much economic activity on the AI boom at the moment"
1
. Global cloud and AI infrastructure capital expenditure is expected to approach $1.5 trillion by 2027, representing a 40% to 50% jump year-over-year2
.Chip-Stock Slide Continues Despite Strong Earnings
The Philadelphia Semiconductor index has shed more than 11% since hitting a record high in June, though it remains up 83% for the year
2
. The chip-stock slide has persisted despite solid earnings reports across the sector. Funds tracking U.S. semiconductor stocks clocked outflows of around $11 billion in the week ended June 24, the biggest weekly outflow this century2
.Nvidia shares fell 2.2%, while AMD and Intel also declined
3
. Analysts at BNY said in a report that Taiwanese stocks saw a record level of selling by foreign investors, citing a reassessment of valuations and fiercer competition from Chinese companies4
. However, they emphasized: "This is not the AI or semiconductor growth story collapsing"4
.Stock Market Volatility Driven by Multiple Factors
Stock market volatility has been amplified by several converging factors beyond concerns about AI infrastructure spending. Markets were shaken by the rollout of another powerful Chinese AI model by Beijing-based Moonshot AI
3
. The new Kimi K3 open-source model was viewed as another sign of how lower-cost, capable Chinese AI models are increasingly challenging rivals like Anthropic's Claude and OpenAI's GPT3
. In China, AI start-ups Zhipu and MiniMax declined 25% and 15% respectively after the Moonshot AI debut1
.Geopolitical tensions also contributed to market unease. Renewed strikes between the United States and Iran pushed oil prices higher, with Brent crude trading above $90 a barrel
3
. Tanker traffic in the Strait of Hormuz, a crucial waterway for global oil transport, nearly ground to a halt, adding pressure on supplies and raising inflation concerns3
. Wee Khoon Chong, a senior strategist at BNY, noted: "Central banks are less dovish than we thought they would be. We have round two of Middle East tensions and oil prices are higher again. It's bringing inflation back into the frame"1
.Related Stories
Profit-Taking and Valuation Concerns
Analysts suggested that geopolitical concerns and inflation worries gave investors an opportunity for profit-taking after massive gains
1
. Even after recent selling, Asia's chipmakers remain among this year's most successful trades, with Kioxia rising more than 2,000% in the past year and TSMC more than doubling1
. Samsung Electronics and SK Hynix are up more than 200% and 500% respectively over the past year1
.Valuations present a mixed picture across the sector. Nvidia trades at a forward price-to-earnings ratio of about 19, its lowest in more than 10 years, while Micron's forward P/E touched a nine-year low of 5.4 in May
2
. However, forward P/E ratios for Intel, AMD, and Marvell Technology stand well above their longer-term averages2
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Source: Market Screener
Fund Managers Remain Cautiously Positioned
A survey of fund managers by Bank of America found that many "trimmed July tech longs to hedge AI risks," but "no one [is] short," and semiconductors remain the "world's most crowded trade"
5
. Data from ORTEX showed that bets against major semiconductor companies have been piling up over the past year, with short interest now at a three-year high2
. Peter Hillerberg, co-founder at ORTEX, characterized this as "caution and hedging creeping back into the sector after a huge run, not the kind of crowded, high-conviction shorting that leads to squeezes"2
.Steve Sosnick, chief market analyst at Interactive Brokers, observed: "We've never seen this kind of extreme earnings growth. But the question then becomes, how long can we expect this to continue"
2
. Despite current volatility, many Wall Street analysts view the pullback as healthy, suggesting it could present buying opportunities at discounted valuations5
.References
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