AI Stocks Tumble as Investors Question Massive AI Infrastructure Spending and Valuations

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 per cent and 2.3 per cent respectively. Markets in South Korea, which have faced the most volatility from the AI trade, were closed. "This has been one of the Tokyo market's worst days for a long time," said a broker in the city. "People were using Japanese names to make some very aggressive bets on tech and AI, and they are bailing out." Futures pointed to the US market opening lower, with those for the Nasdaq 100 and S&P 500 indices down 1.7 per cent and 0.9 per cent respectively. Stoxx Europe 600 futures pointed to a 0.6 per cent drop at the open. The losses in Asia were concentrated in technology stocks. Japanese chipmaker Kioxia led declines, falling more than 16 per cent. It is down more than half from its June peak. Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker, fell more than 7 per cent. In China, AI start-ups Zhipu and MiniMax declined 25 per cent and 15 per cent respectively after rival Moonshot AI debuted a large language model with capabilities approaching those of cutting-edge US labs such as Anthropic. The tech sell-off came after the Nasdaq Composite lost 1.5 per cent on Thursday, as investors dumped US memory and computer storage stocks. Sandisk, Western Digital and Seagate were all down more than 9 per cent, while chipmakers Intel and Micron slid about 6 per cent. The declines "show the uncomfortable reliance of so many markets and so much economic activity on the AI boom at the moment", said Richard Yetsenga, chief economist and head of research at ANZ. Even after recent selling, Asia's chipmakers remain some of this year's most successful AI trades. Kioxia has risen more than 2,000 per cent in the past year, while TSMC has more than doubled. Samsung Electronics and SK Hynix, which make the high-bandwidth memory chips used by Nvidia, are up more than 200 per cent and 500 per cent respectively in the past year. One Asia-based fund manager called Friday's declines "overdone". Analysts said geopolitical concerns, including over rising energy prices from a reboot of tensions in Iran and the potential for monetary policy tightening globally, had given investors an opportunity to take profits. "We're in an environment where inflation in general goes up easily and comes down with difficulty," said Yetsenga. "Sentiment has shifted," said Wee Khoon Chong, a senior strategist at BNY. "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." Hedge fund managers said despite maintaining substantial hedges, their losses had continued to worsen as volatility in the market soared. The situation meant funds' concerns over mounting losses were "overwhelming rational decision-making", said one broker. Investors in Tokyo pointed to an appearance by Nvidia chief Jensen Huang in Japan on Thursday where he announced a robotics partnership with Fujitsu. One investor said the announcement came with little explanation of the product or business model, recalling the environment of the early 2000s just before the internet bubble burst.

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 record high in June. The index is still up 83% this year, a fact that looms large in discussions of what comes next. These firms have enjoyed massive profit growth thanks to rising prices and supply-demand imbalances, but markets are nothing if not forward looking. "We've never seen this kind of extreme earnings growth. But the question then becomes, how long can we expect this to continue," Steve Sosnick, chief market analyst at Interactive Brokers, said. Here's a look at some charts as traders weigh if the chip rally has more to go: SUGAR RUSH FADES Funds tracking U.S. semiconductor stocks clocked outflows of around $11 billion in the week ended June 24, the biggest weekly outflow this century, according to LSEG Lipper data. Sentiment on the sector has been just as volatile as performance recently. The funds recorded inflows of around $12 billion in the previous two weeks. Analysts generally expect hyperscaler capex spending will remain high, with much ⁠of the anxiety about these stocks driven by what-if scenarios involving stock declines and capex cuts. Global cloud and AI infrastructure capital expenditure is expected to approach $1.5 trillion by 2027, a 40% to 50% jump year-over-year, according to a BofA Securities note this week. BULLISH BROKER VIEWS U.S. brokerages have bumped up their price targets, driven by expectations that insatiable AI demand will support earnings growth. Among the S&P 500 chipmakers, Micron (MU.O), opens new tab has the highest expected upside -- reflecting its current price vis-à-vis its consensus analyst target -- of more than 60%. Memory chipmaker Sandisk's shares (SNDK.O), opens new tab are expected to rise over 30%, based on LSEG data. Soaring memory prices due to tight supplies have boosted memory chip companies across the globe including SK Hynix (000660.KS), opens new tab, which jumped more than 10% in its U.S. trading debut on Friday following a $26.5 billion share sale. Nvidia's shares are expected to climb over 40%. But other big semiconductor companies are trading around their median 12-month price target, indicating much of the upside may be priced in. "I consider elevated price targets to be rather a consequence of the incredible momentum in semis rather than a reliable indicator of future performance," said Alexander Lis, chief ⁠investment officer at SD Ventures. BEARS CREEP BACK Data analytics company ORTEX said that bets against major semiconductor companies have been piling up over the past year and short interest now stands at a three-year high. "This is caution and hedging creeping back into the sector after a huge run, not the kind of crowded, high-conviction shorting that leads to squeezes," said Peter Hillerberg, co-founder at ORTEX. Short interest in the stocks has nearly doubled on average over the past three years, Hillerberg said, with that on Marvell (MRVL.O), opens new tab, Qualcomm (QCOM.O), opens new tab and Micron rising the most. EARNINGS TEST Earnings for companies on the S&P 1500 Semiconductors & Equipment Industry index (.SPCOMTKSM), opens new tab are ⁠expected to more than double this year, LSEG-compiled data showed, driven largely by Micron and Nvidia. However, the growth is seen moderating in 2027, with profits expected to rise 46.1%, the data showed. Uncertainty about the U.S. interest rate path and the Middle East conflict could also cast a shadow on earnings estimates. MIND THE VALUATION TRAP Nvidia, which has been at the heart of the AI rally, trades at a forward-looking ⁠price-to-earnings ratio of about 19, its lowest in more than 10 years. Micron's forward P/E touched a nine-year low of 5.4 in May. "The valuations have gotten cheaper over the last two years, and that's primarily a function of earnings growing faster than the price," said Chris Maxey, chief market strategist at Wealthspire Advisors. But forward P/E ratios for Intel (INTC.O), opens new tab, Advanced Micro Devices (AMD.O), opens new tab and ⁠Marvell Technology stand way above their longer-term averages, implying earnings expectations aren't catching up fast enough -- and potentially turning investor focus back to the commodity nature of chipmakers, particularly memory chips. "It's impossible to argue that the cyclicality of the sector will go away. I think the cycle will just get a lot longer," said Marija Veitmane, head of equity research at State Street Global Markets. Reporting by Johann M Cherian, Shashwat Chauhan, Sruthi Shankar and Medha Singh in Bengaluru, editing by Colin Barr and Mrigank Dhaniwala Our Standards: The Thomson Reuters Trust Principles., opens new tab

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 above $90 a barrel as the U.S. and Iran moved closer to resuming an all-out war. Early Monday, the U.S. announced more attacks for a ninth straight night. Iran has been responding to U.S. strikes by hitting U.S.-allies across the Middle East. Brent crude, the international standard, rose 2.6% to $90.40 per barrel and benchmark U.S. crude climbed 2.2% to $83.58 per barrel. "The U.S. and Iran continue to exchange strikes, which are proving to be deadly for both sides," ING commodities strategists Warren Patterson and Ewa Manthey wrote in a commentary Monday. "If this escalation goes unchecked, we could return to an environment of wide-scale attacks across the Persian Gulf." Tanker traffic in the Strait of Hormuz, a crucial waterway for global oil transport, have nearly ground to a halt, adding to pressures on supplies, they noted. In Asian share trading the Kospi, which has benefited substantially from the global AI frenzy, sank 4.9% to 6,490.97. Two of its most valuable stocks booked losses. Samsung Electronics lost 4.4%, while memory chip maker SK Hynix fell 3.3%. Taiwan's Taiex, also heavy in AI-related stocks, edged less than 0.1% lower as its leading chipmaker, TSMC, or Taiwan Semiconductor Manufacturing Co., climbed 2%. It had fallen 7.3% on Friday after the company announced it plans to spend an additional $100 billion to expand its chipmaking capacity in the U.S. Hong Kong's Hang Seng rose 2.1% to 25,105.78, while the Shanghai Composite index gained 1.2% to 3,808.39. Australia's S&P/ASX 200 edged 0.2% higher to 8,815.30. India's Sensex slipped 0.9%. AI-related shares including chipmaking stocks declined on Friday, pulling world markets lower. Pledges of huge spending on AI are fueling worries the sector may be in a bubble, and many investors have opted to sell to lock in profits from recent big gains. Markets were also shaken by the rollout of another powerful Chinese AI model, this time by Beijing-based Moonshot AI. The impact of the new Kimi K3 open-source AI model was similar to when China's " DeepSeek moment" rattled world markets in early 2025. It was viewed as another sign of how lower-cost, capable Chinese AI models are increasingly challenging rivals like Anthropic's Claude and OpenAI's GPT. On Wall Street, the benchmark S&P 500 ended the week down 1% at 7,457.69. The Dow Jones Industrial Average fell 0.8% to 52,146.42, while the technology-heavy Nasdaq composite lost 1.4% to 25,520.24. Chipmaking stocks took a hit, with Nvidia falling 2.2%, while Broadcom and AMD, or Advanced Micro Devices, fell 1%. SpaceX, Elon Musk's rocket company, dropped 5.4% after dropping below its initial public offering price of $135 a share, reaching its lowest point since its stock began public trading on the Nasdaq last month. In other dealings, the U.S. dollar fell to 162.37 Japanese yen from 162.43 yen. The euro was trading at $1.1446, up from $1.1438.

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 begins. Investors have begun to raise questions about whether the vast amounts of money, much of it borrowed, that is being spent on artificial intelligence will bear the expected returns. Companies are investing billions in A.I. infrastructure like data centers and factories to meet ever-increasing demand for chips. Excitement over A.I. technology, its rapid pace of improvement and its world-changing possibilities have led to dizzying rally in tech stocks and staggering valuations. But skepticism is growing over the potential for revenue growth that matches the enormous spending by A.I. giants. Adding to concerns about the risks facing markets on Friday were renewed strikes between the United States and Iran. The passage of ships through the Strait of Hormuz, a vital waterway for the trade in energy and related products, have pushed up oil prices again and led to concern over rising inflation. Brent crude, the global oil benchmark, was trading at nearly $86 a barrel on Friday. Earlier, stocks tumbled across Asia led by a plunge in technology shares. Taiwan's Taiex index fell 6.5 percent, a day after the chip-making giant Taiwan Semiconductor Manufacturing Company announced an extra $100 billion investment on operations in the United States. Shares in TSMC fell more than 7 percent on Friday Analysts at BNY, a New York bank, said in a report that Taiwanese stocks saw a record level of selling by foreign investors on Friday. They cited a reassessment by investors of the valuations of the biggest tech companies and "fiercer" competition from Chinese companies, but held back from projecting a deeper gloom. "This is not the A.I. or semiconductor growth story collapsing," they wrote. Japan's Nikkei 225 was down more than 4 percent. The KOSPI index in South Korea, a bellwether of A.I. investments, is up more than 60 percent this year but has had drastic daily rises and falls. The country's markets were closed on Friday for a holiday. In Europe, the Stoxx 600, an index that tracks the region's largest companies, fell 0.6 percent. Germany's DAX index slid 0.7 percent. Shares in the Dutch powerhouse ASML, which makes equipment crucial to chip manufacturing, were down more than 3 percent. The Philadelphia Semiconductor index, which tracks semiconductor companies, is down 8.4 percent this week and 19 percent from its high in June.

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% in recent trading after the world's largest contract chip manufacturer posted quarterly results that topped analysts estimates. Shares of Nvidia (NVDA), Advanced Micro Devices (AMD), and Intel (INTC) were also lower. The PHLX Semiconductor Sector Index (SOX) was down 3%. Memory chipmakers and data storage stocks have been among the strongest performers in the AI trade. Today, they were among the major indexes' leading decliners, with Sandisk (SNDK), Seagate (STX) and Micron Technology (MU) all down more than 5%. The Roundhill Memory ETF (DRAM) fell 7%. Worries about growing expenditures on AI infrastructure and the sustainability of spending could be weighing on sentiment. TSMC said today that it would raise its capital expenditures forecast for the year to $60 billion to $64 billion, up from $52 billion to $56 billion. The company also said it plans to invest another $100 billion in its operations in Arizona to meet demand. A number of Wall Street analysts have said in recent weeks they would view the pullback in chipmakers and other AI stocks as healthy, suggesting that it could be an opportunity to buy the shares at a discount. A survey of fund managers by Bank of America published earlier this week 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." Even with their recent losses, many AI-related stocks are among the S&P 500's biggest gainers for the year so far. Sandisk leads the list of top performers for 2026 with shares up over 500%, followed by AI server maker Dell (DELL), memory chipmaker Micron, and Seagate. Also worth watching today: Data center stock Csquare, which is set to start trading sometime Thursday after its IPO priced below its marketed range. For more reporting from Investopedia on today's market moves, click here.

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 biggest contract manufacturer of computer chips, announced it plans to spend an extra US$100 billion on building fabrication plants in the U.S. TSMC dropped 7.3 per cent on Friday. In early European trading, Germany's DAX dropped 0.3 per cent to 24,841.19 and the CAC 40 in Paris fell 0.4 per cent to 8,346.09. Britain's FTSE 100 advanced 0.4 per cent to 10,615.71. The future for the S&P 500 declined 0.8 per cent while that for the Dow Jones Industrial Average was 0.5 per cent lower. Stocks related to artificial intelligence have been under pressure for weeks because of worries that their prices have shot too high and that voracious demand for computer memory and processors may not be sustainable if AI ends up not producing as much profit and productivity as promised. Oil prices surged as fighting in the Middle East intensified. The United States expanded its airstrike campaign against Iran early Friday by hitting more bridges and collapsing a tower at a key Iranian port, part of U.S. President Donald Trump's threats to start striking infrastructure to pressure Tehran to ease its chokehold on the Strait of Hormuz. In other Asian trading, the Nikkei lost 4 per cent to 64,141.12, at times trading near its lowest level in over a month, as shares in computer chip equipment maker Tokyo Electron sank 8.2 per cent. Chip testing equipment maker Advantest tumbled 7.2 per cent. SoftBank Group shed 9 per cent. The Hang Seng in Hong Kong gave up 2 per cent to 24,505.38, while the Shanghai Composite index lost 3.1 per cent to 3,764.15, dipping to its lowest level in nearly 11 months. In Australia, the S&P/ASX 200 declined 0.5 per cent to 8,796.70. "Now investors are taking profits from the first-half winners and moving toward areas that were left behind," Stephen Innes, of SPI Asset Management, said in a commentary. On Thursday, the S&P 500 fell 0.5 per cent even though nearly three out of every four stocks in the index rose after more of the country's biggest companies reported better earnings for the latest quarter than analysts expected. The Dow Jones Industrial Average dipped 0.2 per cent, and the Nasdaq composite lost 1.5 per cent. Nvidia fell 2.4 per cent, making it the heaviest weight on the index. Other stocks that have benefited from strong demand for AI also sank, giving back some of their stellar gains. Micron Technology fell 5.6 per cent to shave its gain for the year so far below 199 per cent. SanDisk fell 12.6 per cent but is nevertheless up 494 per cent for the year. Western Digital sank 9.2 per cent but is still up 171 per cent for the year. Oil prices are near their highest level in a month because of worries that the war with Iran will keep oil tankers out of the Strait of Hormuz and block shipments of crude from the Persian Gulf to customers worldwide. The price for a barrel of Brent crude, the international standard, rose 1.1 per cent to $85.13 per barrel. U.S. benchmark crude oil was up 1.3 per cent at $79.95 per barrel. Reports on the U.S. economy Thursday came in mixed. One said shoppers spent less at U.S. retailers last month than economists expected. A separate report said fewer U.S. workers applied for unemployment benefits last week, an indication of a solid job market, while a third report said manufacturing in the mid-Atlantic region is better than economists expected. In other dealings early Friday, the U.S. dollar was nearly unchanged at 162.38 Japanese yen. The euro fell to $1.1440 from $1.1443.

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 also extended losses, while South Korean markets were closed for a public holiday. The Nikkei was dragged lower by steep declines in heavyweight technology and electronic component makers. Memory producer Kioxia Holdings Corp (TYO:285A) plunged more than 16%, marking its biggest decline in months, while Murata Mfg Co (TYO:6981) tumbled nearly 12% and TDK fell more than 6%. Sony bucked the broader weakness, rising about 1.6%. Track AI stocks, chipmakers and analyst insights in real time with InvestingPro - now 60% off The selling spread across Greater China, where the CSI 1000 fell more than 3% to its lowest level since March 24, reflecting heavy losses in small and mid-cap technology stocks. AI chip designer Cambricon Technologies Corp Ltd (SS:688256) fell more than 6%, while Foxconn Industrial Internet Co Ltd (SS:601138) lost over 5%. Semiconductor names including SMIC, NAURA Technology and Luxshare Precision also declined, reflecting broad selling across China's AI hardware supply chain. In Hong Kong, the Hang Seng Index fell more than 2%, with technology heavyweights Meituan and Kuaishou tumbling about 6%, while Tencent Holdings, Baidu, Alibaba and Xiaomi lost between 2% and 4%. The selling followed a sharp retreat in U.S. technology stocks overnight after investors dumped many of this year's best-performing AI beneficiaries. Memory makers Sandisk, Western Digital and Seagate each lost more than 9%, while Intel and Micron dropped about 6%, extending a broader rotation away from high-multiple AI stocks. IBM also suffered one of its biggest-ever single-day declines after warning that customers were redirecting spending toward AI infrastructure, while recently listed SpaceX continued retreating from its post-IPO highs as enthusiasm for AI-linked growth companies cooled. The pullback also reflected a broader unwinding of momentum trades rather than company-specific concerns. Investors remain cautious over elevated AI valuations, questions surrounding returns on massive data-centre spending and increasing competition from Chinese large-language model developers, even as long-term demand for AI infrastructure remains intact. At the same time, renewed geopolitical tensions in the Middle East have added another layer of uncertainty for risk assets. For China, Bank of America described the country as an important long-term AI challenger, highlighting its rapid AI adoption, low data costs and expanding domestic ecosystem. However, the bank said execution, continued investment and the ability to convert widespread AI use into sustainable productivity gains would determine how much of that potential is ultimately realised.

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. Investors are no longer rewarding AI spending alone -- they want evidence that billions in capex will translate into sustainable profits and cash flow. * China is becoming the next competitive fault line. As Chinese memory producers scale up, the greatest pressure is likely to emerge in commoditised chips rather than the cutting edge of AI hardware. * The easy money has been made. The next phase of the AI cycle will reward execution over excitement, separating companies with durable economic moats from those that merely rode the boom. The Eye of the Storm Only a few weeks ago, semiconductors looked like the market's one-way express train. Every dip found another passenger, every earnings beat added another carriage, and every AI headline convinced investors the track could run forever. Now the same train is shaking hard enough to empty the dining car. South Korea has moved directly into the eye of the storm. The KOSPI collapsed 9%, triggering another trading halt, while SK Hynix (NASDAQ:SKHY) suffered a record 15% fall and Samsung Electronics dropped almost 11%. Japan's Kioxia was dragged into the downdraft as the memory complex absorbed another brutal wave of selling. Renewed US-Iran hostilities and the jump in oil provided the latest excuse to reduce risk, but geopolitics merely struck the match. The timber inside the semiconductor trade had been drying for weeks. Positioning was crowded, expectations were towering, and investors had started questioning whether the staggering sums being poured into AI infrastructure could produce returns quickly enough to justify the price already paid. Yet the violence in the share prices should not be confused with a collapse in the underlying business. The foundries are still humming. Data centres are still rising from the ground. Hyperscalers are still writing enormous cheques, while the largest semiconductor companies are expected to generate rivers of cash over the coming year. The storm is tearing through the stock market, but the factories have not lost power and the order books have not yet received the recession memo. That is the tension sitting at the heart of the selloff. Price has broken first, while the fundamental engine continues to turn. Markets often begin dismantling the scaffolding before anyone finds a serious crack in the building. But another fault line has opened beneath the memory trade. China is no longer simply part of the demand story. It is becoming a competitive threat. ChangXin Memory Technologies is preparing for its initial public offering, drawing fresh attention to China's growing ambitions in DRAM. At the advanced end of the market, the castle walls remain relatively high. Manufacturing is complex, customer approval takes time, and the largest AI buyers cannot afford unreliable supply. Commodity memory is another battlefield altogether. It has always been a business where today's shortage becomes tomorrow's glut and where every period of exceptional profit attracts another factory through the gate. Chinese producers have the capital, policy support and patience to attack that weaker flank. The established memory companies may still control the commanding heights, but the moat around the broader business is beginning to look less like a fortress and more like a sandbank at low tide. It remains visible, but the water is moving. This makes the current shakeout more complex than a simple correction in an overheated AI trade. Investors are facing two storms at once: uncertainty about the eventual return on AI spending and the prospect of Chinese capacity pressuring the industry's most commoditized products. The AI supercycle may not be over, but its honeymoon certainly is. The dreamers built the story, the momentum crowd pushed it into the clouds, and now the accountants have arrived carrying measuring tapes. The next phase will not reward every company simply because it owns a cleanroom and mentions AI on an earnings call. The market has stopped paying for blueprints. It wants occupied buildings, rental income and proof that silicon, electricity and ambition can be turned into durable profits. The storm has arrived. The machines are still running, but the market is no longer handing out umbrellas for free. Tech Supply Chain Daily: SK Hynix Has Become the AI Money Tree SK Hynix has become one of the clearest financial winners of the global AI buildout. Its grip on high-bandwidth memory, the specialist chips paired with Nvidia's processors, has turned the company into the most valuable piece of South Korea's technology supply chain and one of the most important pressure points in the entire AI investment cycle. The numbers explain the enthusiasm. With advanced memory supply expected to remain tight into 2027, SK Hynix is forecast to generate more than $300 billion in free cash flow across this year and next, comfortably ahead of Micron. That cash machine helped support a record $26.5 billion US share sale and elevated the company into the trillion-dollar club. The problem with becoming the market's golden goose is that everyone eventually wants an egg. South Korea's government sees SK Hynix as a tool for reviving investment, rebuilding industrial confidence and spreading semiconductor development beyond the established manufacturing belt south of Seoul. Washington wants more capacity built in the US. Investors want rising profits and capital returns, while households increasingly see the stock as a national wealth vehicle. Those demands are beginning to collide. SK Hynix has committed to doubling wafer capacity within five years and is considering investments far beyond the $35 billion it has already deployed in the US. Yet the company is not expanding alone. Samsung is building additional high-bandwidth memory capacity, Micron is increasing US spending and China's ChangXin Memory is emerging as a more credible competitive threat. The result could be a familiar semiconductor trap. Today's shortage encourages every producer to build at the same time. Several years later, that capacity arrives together, turning scarcity into oversupply just as demand begins to cool. Management believes the memory shortage could persist beyond 2030, but investors should remember how quickly this industry turns. SK Hynix is enjoying record profitability now, yet it was losing money only three years ago. Memory remains one of technology's most cyclical businesses, capable of moving from peak pricing to painful inventory correction within a couple of years. That cycle matters because the shareholder base has changed. South Korean retail investors have piled into the stock while global institutions sold into the rally. Many have also chased leveraged exchange-traded funds launched just as volatility began to rise, leaving them exposed not only to price declines but to the slow erosion caused by volatility decay. This turns SK Hynix into more than a semiconductor story. It is now a test of whether the AI supply chain can keep converting extraordinary demand into durable returns without repeating the industry's old boom-and-bust script. The company must satisfy governments seeking factories, investors demanding discipline and households betting that one stock can become a national pension plan. That is a heavy burden for any business, particularly one operating in a market where yesterday's shortage can become tomorrow's glut. SK Hynix has become the AI money tree. The difficult part is making sure the next wave of spending produces more fruit rather than too many branches.

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, investors have started to retreat from crowded semiconductor trades over worries about the scale of AI-related spending. Some of the chip stocks extended the previous session's losses, with heavyweight Nvidia down 1.3%. The decline, combined with an early gain in Apple, pushed the iPhone maker ahead of Nvidia to briefly become the world's most valuable company. The Philadelphia SE Semiconductor index fell 1% and was set for its worst week since March. The gauge has shed more than 20% from its late June record high. Losses in other mega-cap stocks also weighed on markets. Meta Platforms fell 5.2%. "For some of these stocks, the valuations are extremely hard to justify without seeing a tangible product," said Louis Kondratev, trader at XFUNDs. "But I don't think the chip sector lost steam completely. Right now, it's just a healthy pullback." Chinese AI startup Moonshot unveiled Kimi K3, a 2.8 trillion-parameter model it said was the world's largest open-weight AI, adding to investors' concerns over whether hefty spending by heavyweights will deliver tangible results. Chinese open-source models have raised some competitive fears, said Angelo Kourkafas, senior global investment strategist at Edward Jones Investments. "Supposedly, there are some offerings rivaling the performance of Anthropic and OpenAI... potentially that is contributing today to some of that weakness that started in Asia." Shares of Netflix tumbled 9%, after the streaming giant forecast third-quarter numbers below Street estimates on Thursday, weighing heavily on the communication services sector that slid 2.4%. At 12:07 p.m. ET, the Dow Jones Industrial Average fell 127.51 points, or 0.24%, to 52,425.46, the S&P 500 lost 56.07 points, or 0.74%, to 7,477.70 and the Nasdaq Composite lost 335.74 points, or 1.30%, to 25,546.21. All three main indexes were poised for weekly losses, as an upbeat start to second-quarter earnings and benign inflation data were overshadowed by concerns over the chip sector. The benchmark S&P 500 touched a two-week low earlier in the session, while the tech-heavy Nasdaq hit a three-week trough before both trimmed some losses. The CBOE Volatility Index, Wall Street's fear gauge, hit its highest in more than a week. It was last up 1.08 points to 17.80. Fears of further escalation in conflict in the Middle East mounted as Iran hit a power and desalination plant in Kuwait, in response to a U.S. strike on its bridges and an airport on Friday. U.S. consumer sentiment, however, increased to a five-month high in July, but it is likely temporary as renewed U.S.-Iran tensions raise gasoline prices. Among other movers, Intuitive Surgical shares slid nearly 12.5% after the medical device maker kept its da Vinci procedure-growth forecast unchanged and warned insurance-plan changes may be delaying patient care. Declining issues outnumbered advancers by a 1.76-to-1 ratio on the NYSE and by a 1.73-to-1 ratio on the Nasdaq. (Reporting by Ragini Mathur and Avinash P in Bengaluru; Additional reporting by Sudeshna Ghoshal; Editing by Joyjeet Das) By Ragini Mathur and Avinash P

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 better-than-expected earnings from Taiwan's TSMC and Dutch chip supplier ASML, their shares--along with those of other semiconductor names like Intel and Broadcom--remained under pressure, according to Tiger Brokers market strategist James Ooi. "The selloff may suggest that sentiment towards chip stocks is shifting following their sizable year-to-date rally, with some investors questioning whether current valuations leave sufficient room for further upside, even in the face of solid earnings," he said. Developments in the Middle East also came back into focus after the U.S. launched another wave of strikes against Iran. The U.S. struck Iranian bridges on Thursday, aiming to cut off supply routes to a port city and naval base in the Strait of Hormuz that Iran uses to attack ships and project power, a senior U.S. official said. Iran has responded by striking U.S. infrastructure in the region and assets of its Gulf allies. These moves have fueled concerns that the conflict could broaden further, OCBC Group Research analysts said. Japan's Nikkei Stock Average was last trading 4.4% lower, after dropping below 65000 for the first time since June 12. AI-related stocks lead the declines with Advantest down 11%, SoftBank Group falling 9.7%, and Tokyo Electron shedding 8.3%. Taiwan's Taiex slipped 4.3%, pressured by a 4.05% decline in TSMC. The chip maker said Thursday it aims to invest an additional $100 billion in the U.S. as part of its strategy to cement its leadership in global semiconductor supply chains. Its U.S.-listed shares closed 2.3% lower overnight. Hong Kong's Hang Seng Index declined 1.5%, while the FTSE Straits Times Index dropped 0.65%. South Korea's market is closed for a holiday. Oil prices rose on supply disruption concerns. Front-month West Texas Intermediate crude futures climbed 0.9% to $79.67 a barrel, while front-month Brent gained 0.8% to $84.88 a barrel, bringing weekly gains for both contracts to 12% each. While oil prices have gained, they remain well below the peak recorded in late April, analysts at ANZ Research noted. "As long as prices stay below $90/bbl, risks to [Asia's] growth and inflation are manageable, in our view," they added. Meanwhile, spot gold rose 0.3% but traded below the psychologically-important $4,000 an ounce. Softer-than-expected U.S. inflation data earlier this week eased bets of the Federal Reserve tightening and initially supported bullion, but that momentum has faded as bond yields recovered slightly, said Tony Sage of Critical Metals. Still, continued central bank gold-buying should be able to limit risk of declines over the longer term, he added.

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 stocks pared some losses as the morning progressed, but remained sharply lower. Chip makers Infineon Technologies and STMicroelectronics were down 4% and 1.8%, respectively, while Dutch suppliers to semiconductor makers also dropped. ASML, which makes semiconductor-printing machines and is the most valuable company in Europe, fell 2.5%. BE Semiconductor was down 4%. Declines in Europe and the U.S. came after a torrid day for chip makers in Korea. SK Hynix's Seoul-listed shares tumbled over 15% following its historic U.S. trading debut on Friday, with New York-traded depository receipts down around 6%. Despite the sharp move, there was no clear trigger for SK Hynix's fall, Raymond James's head of equity research, Amish Patel, said. "My read is that this was primarily a positioning and sentiment-driven move rather than a reaction to any material change in fundamentals," Patel said. Tumbling memory chip stocks are less a reflection of concerns around the build out of artificial intelligence, and more a product of investors pulling back from crowded bets on a small number of chip makers, according to Helen Jewell, BlackRock's international CIO for fundamental equities. Memory stocks like SK Hynix and Micron have seen huge swings in their share price in recent days. Some market watchers have sounded warnings about the use of leverage to bet on single stocks. But the bigger problem, Jewell said, is crowding. "The reason the swings are more extreme than normal is because the crowdedness is so extreme, because the returns have been so extreme," Jewell said. The fresh round of selling extends a volatile period for memory stocks. Investors are debating whether demand for memory chips is nearing a peak, or whether the rapid buildout of AI capacity will mean hyperscalers are willing to pay high chip prices for longer into the future. Chip stocks have seen a rapid run-up in value so far this year--the PHLX Semiconductor Index was up around 83% for the year to Friday's close--and some investors are choosing to cash out, resulting in wild swings in the index in recent weeks. The huge returns for memory chip are because "AI demand has somehow created the perception that a sector historically defined by boom-and-bust cycles could remain permanently in the boom phase," Swissquote senior analyst Ipek Ozkardeskaya wrote in a client note. "Volatility in memory chip prices remains far too high to call the current price action sustainable." Even without market-moving news, changes in sentiment can lead to wild price swings because of the wide-scale participation of leveraged traders, Global X ETFs investment strategist Andrew Ye said. "The challenge is trying to reconcile the long-term outlook and the short-term," with investors weighing complicated questions around the durability of demand for memory chips against the vagaries of a sentiment-driven market, Ye said. Monday's wobble comes ahead of earnings for key players in global AI supply chains this week. Taiwan Semiconductor Manufacturing Co. reports second-quarter earnings Thursday after the company notched a 6.2% on-month rise in revenue for June. ASML will report earnings Wednesday.

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 early afternoon European trade. European chip stocks pared some losses as the morning progressed, but remained sharply lower. Chip makers Infineon Technologies and STMicroelectronics were down 1.6% and 1%, respectively, while Dutch suppliers to semiconductor makers also dropped. ASML, which makes semiconductor-printing machines and is the most valuable company in Europe, fell 1.3%. BE Semiconductor was down 2.1%. Declines in Europe and the U.S. came after a torrid day for chip makers in Korea. SK Hynix's Seoul-listed shares tumbled over 15% following its historic U.S. trading debut on Friday, with New York-traded depository receipts down around 9%. Despite the sharp move, there was no clear trigger for SK Hynix's fall, Raymond James's head of equity research, Amish Patel, said. "My read is that this was primarily a positioning and sentiment-driven move rather than a reaction to any material change in fundamentals," Patel said. The fresh round of selling extends a volatile period for memory stocks. Investors are debating whether demand for memory chips is nearing a peak, or whether the rapid buildout of AI capacity will mean hyperscalers are willing to pay high chip prices for longer into the future. Chip stocks have seen a rapid run-up in value so far this year--the PHLX Semiconductor Index was up around 83% for the year to Friday's close--and some investors are choosing to cash out, resulting in wild swings in the index in recent weeks. The huge returns for memory chip are because "AI demand has somehow created the perception that a sector historically defined by boom-and-bust cycles could remain permanently in the boom phase," Swissquote senior analyst Ipek Ozkardeskaya wrote in a client note. "Volatility in memory chip prices remains far too high to call the current price action sustainable." Even without market-moving news, changes in sentiment can lead to wild price swings because of the wide-scale participation of leveraged traders, Global X ETFs investment strategist Andrew Ye said. "The challenge is trying to reconcile the long-term outlook and the short-term," with investors weighing complicated questions around the durability of demand for memory chips against the vagaries of a sentiment-driven market, Ye said. Monday's wobble comes ahead of earnings for key players in global AI supply chains this week. Taiwan Semiconductor Manufacturing Co. reports second-quarter earnings Thursday after the company notched a 6.2% on-month rise in revenue for June. ASML will report earnings Wednesday.