Chip firms fall in US and Asia as AI jitters rattle investors
Major semiconductor and technology stocks across the US and Asia plummeted sharply as growing anxiety over artificial intelligence investments spooked markets, allowing Apple to overtake Nvidia as the world's most valuable company.
Stock photo for illustration only, not from the actual event
- South Korea's Kospi index paused trading temporarily after plunging 10%.
- Samsung Electronics and SK Hynix both dropped by over 10% amid massive sell-offs.
- Nvidia fell 5% in New York, losing its top spot as the world's most valuable firm to Apple.
- Investors increasingly question whether massive AI expenditures will yield sufficient returns.
Shares of major chipmakers tumbled heavily across the United States and Asia on Tuesday, deepening a broader sell-off in artificial intelligence-related stocks as market participants grew increasingly anxious about the financial sustainability and profitability of massive AI investments.
Trading on South Korea's benchmark Kospi index was temporarily halted during Tuesday morning trade following an initial 8% slide. The index dipped further after the 20-minute halt was lifted, settling around 10% lower. The steep downturn was spearheaded by heavyweight technology corporations, with Samsung Electronics and SK Hynix both experiencing drops exceeding 10%.
This market correction follows a 5% decline for AI chip titan Nvidia in New York on Monday, which stripped the company of its crown as the world's most valuable listed firm, ceding the title to Apple. The tech-heavy Kospi index has hit its circuit breaker mechanism eight times this year to suppress panic selling. The index had more than doubled from the start of the year through mid-June before erasing approximately one-third of its value, driven by heightened trading volatility from a high concentration of retail investors in South Korea.
Stock photo for illustration only, not from the actual event
On Monday, US-listed shares of SK Hynix slid 7.5%, dropping well below the $149 offer price set during its record-shattering Nasdaq debut on July 9. Meanwhile, Japan's Nikkei 225 index, also heavily weighted toward technology enterprises, traded nearly 4.5% lower on Tuesday morning.
Context and Analysis: The recent retreat in semiconductor stocks underscores a growing tension between massive capital expenditure and tangible financial returns in the tech sector. As governments and corporations pour hundreds of billions of dollars into AI infrastructure, investors are recalibrating their expectations. The sharp corrections indicate that markets are no longer satisfied with speculative growth alone and are beginning to demand clear monetization pathways for these unprecedented capital outlays.
Nvidia's share drop on Monday followed a Wall Street Journal report stating that the company is in discussions to provide roughly $250 billion for OpenAI as part of a massive data-centre project. The BBC has reached out to both Nvidia and OpenAI for comments. The downward pressure allowed Apple to overtake Nvidia as the world's most valuable company, fueled by a 25% gain for the iPhone maker this year. As stakeholders pump hundreds of billions into developing AI capabilities, analysts continue to question whether the technology can ultimately generate enough profit to recoup such staggering investments.
Source: BBC Business
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