'Brutal session' for chip stocks shows AI trade is turning
SOXX•Chip stocks fell across Asia and the United States as concerns about interest rates, financing costs and returns on AI investment weighed on the sector. The Philadelphia semiconductor index fell 1.7% Tuesday and remains up 68% for the year, while South Korea's KOSPI dropped more than 6%.
1. Chip stocks retreat
Selling in chip stocks extended Tuesday, with South Korea's KOSPI falling more than 6% for a fifth straight down day and Tokyo memory-maker Kioxia losing 13%. In the United States, the Philadelphia semiconductor index fell 1.7% and Micron Technology dropped 4%; the index remains up 68% this year, and Micron shares have tripled.
2. Financing concerns grow
The article describes widening caution about AI-related investment, following the shelving of Firmus's planned $5 billion Australian IPO and increased selectivity among credit investors. Tencent's 10-year dollar bond guidance was about 1.15 percentage points above Treasury yields, which stood at 5.2%.
3. Investors debate outlook
BlackRock's research arm downgraded its US stocks outlook to neutral, citing potential volatility around the AI buildout, while the IMF warned that an AI correction could have global consequences. Some investors see the selloff as a response to positioning and the cost of capital rather than deteriorating AI demand; Meta shares rose 3.4% after releasing a new AI model.
