Chip stocks fall 20% from June highs
The global sell-off in semiconductor stocks deepened on Tuesday, with the PHLX Semiconductor Index falling more than 5%. Nvidia stock dropped roughly 1% after losing 5% on Monday, ceding its position as the world's most valuable company to Apple. AMD fell more than 8%, while Broadcom, Intel, Marvell, and Qualcomm all slid. Memory leaders Micron and SK Hynix both fell more than 5%, with SK Hynix dropping over 14% in Seoul trading.
The sell-off has pushed chip stocks more than 20% below their June record highs, officially entering bear-market territory. Investors are growing increasingly worried that hyperscalers' massive AI spending spree may not deliver the expected returns.
China chipmaker CXMT soars 470% in explosive IPO
Chinese memory chip maker ChangXin Memory Technologies (CXMT) surged 470% in its Shanghai IPO, briefly overtaking megabank ICBC as the mainland's most valuable company. The blockbuster debut renewed investor concerns that CXMT's rapid expansion could weigh on global memory chip prices. Meanwhile, a report from The Information revealed that a Chinese state-backed company has begun mass-producing a key piece of chipmaking equipment, directly challenging ASML's dominance in the lithography market.
ASML shares fell more than 5% on the news. European semiconductor stocks also moved lower as concerns about circular financing and competition from China weighed on the sector.
AI spending fears grip Wall Street ahead of Big Tech earnings
Investors are now awaiting earnings from Microsoft, Amazon, and Meta, all expected to announce further increases in AI-related capital spending. Alphabet stock already plummeted last week after it raised its capex outlook. The circular financing concern — where AI companies raise debt to buy chips from the same companies they are invested in — has emerged as a new risk factor. Nvidia is reportedly in talks to backstop $250 billion in funding for OpenAI tied to a major data center project.
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