AI jitters trigger massive global chip stock sell-off

The market’s confidence in AI remains fragile. The Nasdaq-100 briefly entered correction territory after investors rushed to sell chip shares across global markets.

The index erased most of its losses to close down less than 1%, highlighting the market’s sensitivity to even minor changes in AI sentiment.

At the same time, the Philadelphia Semiconductor Index slipped into a bear market after dropping more than 20% from its peak.

The sell-off spread from Asia to the United States, hitting several of the world’s biggest semiconductor companies.

Chipmakers suffered steep losses across the board. Sandisk plunged 14%, while AMD, Arm Holdings, Micron and Seagate each lost more than 8%. Dell Technologies dropped 8.1%, and Intel fell nearly 6%.

The selling began in Asia, where Samsung Electronics and SK Hynix, two of the world’s largest AI memory chip makers, plunged more than 15%. Japan’s Kioxia also tumbled 18%, while South Korea’s Kospi index extended its decline to more than 30% from its recent high.

Investor sentiment weakened further after reports claimed that a Chinese state-backed company had started mass-producing domestic chipmaking equipment. However, the company was not identified, and the report has not been independently verified.

Markets are now awaiting earnings from Meta, Microsoft and Amazon, whose massive investments in AI data centers are expected to influence the sector’s direction. 

Despite the sharp sell-off, analysts say demand for AI services and cloud computing remains strong, supporting the industry’s long-term growth outlook.