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Chip stocks lose $1.3 trillion in AI sell-off
AI-linked chip stocks lost $1.3 trillion in a week, led by Nvidia’s $238 billion decline, as investors questioned surging infrastructure spending.
Image: Mashable
The 20 most valuable chip stocks lost $1.3 trillion over the past week as investors sold companies that benefited most from the AI boom, according to CNBC analysis.
Nvidia suffered the largest dollar loss. Investors liquidated $238 billion in the company’s stock since the market closed on Friday, a sharp reversal for the chipmaker that has gained more than any other company from demand for AI hardware.
Chip stocks hit across memory and manufacturing
The sell-off spread through the broader semiconductor sector:
- SK Hynix: down $176 billion
- Samsung: down $173 billion
- Taiwan Semiconductor Manufacturing Co.: down $119 billion
- Micron: down $113 billion
- AMD: down $110 billion
Demand for memory and storage has surged as AI companies buy up supply for their compute infrastructure. That has reduced availability of RAM and SSD storage for everyday consumers, while companies such as Apple have been forced to raise product prices, according to the source.
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The market decline suggests investors are reassessing whether the sector’s expected growth can justify its current valuations. Morningstar Chief Equity Strategist Michael Field told CNBC that the move appears to reflect sentiment more than a change in company fundamentals.
“This decline appears to be driven largely by sentiment rather than fundamentals. Simply put, it’s loss of confidence.”
Field said Morningstar still sees upside in many AI stocks, but warned that growth companies depend heavily on cash flows expected far into the future. That makes their valuations particularly sensitive to changes in investor confidence.
AI spending raises questions about returns
The concern is not that AI companies are failing to generate revenue. Rather, investors are increasingly focused on how much those companies spend to build the infrastructure required to support that growth.
Recent reporting by the Financial Times and Ed Zitron said OpenAI recorded a net loss of $38.5 billion last year. This week, OpenAI also announced plans to spend $750 billion on infrastructure through 2030.
Google recently experienced its first-ever quarter of negative cash flow, which the source attributed to spending on AI infrastructure. The article does not provide the quarter’s cash-flow figure or further details about Google’s spending.
Investor sentiment could still reverse quickly. For now, the losses show that confidence in AI-related stocks is no longer moving in only one direction.
Enterprise Editor
Marcus follows the money. He covers enterprise software, cloud architecture, and the tectonic shifts in Big Tech strategy. He translates dense earnings calls and complex M&A activity into actionable insights about where the industry is actually heading. If a tech giant makes a silent pivot, Marcus is usually the first to notice.
via Mashable
