‘Brutal session’ for chip stocks shows AI trade is turning
SOXX•Chip stocks fell across Asia and the United States as investors questioned the cost and returns of AI investment. South Korea’s KOSPI dropped more than 6%, while the Philadelphia Semiconductor Index was down 2.7% and Micron fell 5%.
1. Chip stocks extend declines
Selling in AI-related shares spread across markets on Tuesday. South Korea’s KOSPI fell more than 6% for a fifth straight down day, while the Philadelphia Semiconductor Index was on track for a sixth consecutive decline, down 2.7%, and Micron Technology fell 5%. Shanghai’s tech-focused STAR Market was down more than a third from its July peak.
2. Investors weigh costs
The declines reflect growing concern that higher interest rates and volatile bond markets could raise the cost of financing the AI buildout. Last week, data centre operator Firmus shelved a planned $5 billion Australian IPO as investor interest waned. Investors have also become more selective on AI debt, while BlackRock’s research arm downgraded its US stock outlook to neutral, citing potential volatility around AI investment.
3. Debate over AI demand
Some investors see the selloff as a warning about positioning and the cost of capital rather than a deterioration in AI demand. An investment strategist said markets are increasingly focused on monetisation and returns on invested capital, while warning that South Korea could be an early sign of a broader shakeout.
