tech
Investors Blink on the AI Trade
Chipmakers are the picks-and-shovels of the AI gold rush, and they are now looking shaky.
TL;DR
- Semiconductor stocks, crucial for AI infrastructure, have seen a sharp decline after a period of record-setting gains.
- The iShares Semiconductor ETF (SOXX) has fallen 20% since its June 22 high, with individual stocks like Intel and Micron experiencing even larger drops.
- Despite recent declines, many chipmaker stocks still show substantial year-to-date gains.
- Investor confidence in the AI trade appears shaken due to competition from Chinese AI models and uncertainty about hyperscaler profitability.
- The South Korean KOSPI index, heavily influenced by chipmakers Samsung and SK Hynix, has entered bear market territory, acting as an early indicator.
- Upcoming earnings reports from Alphabet and Intel will be critical stress tests for the AI trade.