US Stocks Tumble as AI Chip Slump Deepens: SanDisk Plummets 12%, Micron Dips 9%, and AMD Declines 5%.

The recent selloff in semiconductor stocks underscores a crucial turning point in the market, particularly as it relates to the artificial intelligence (AI) sector. Following an impressive run fueled by exuberant investment in AI technologies, major players within the memory-chip market experienced significant declines, with SanDisk plunging 12% and Micron Technology falling 9%. The broader technology sector mirrored this correction, evidenced by Nasdaq 100 futures dropping approximately 2.5%, indicating possible systemic vulnerabilities amid previously high valuations.

Investors are reassessing the sustainability of returns from massive capital expenditures directed towards AI infrastructure by leading technology firms, including Microsoft, Amazon, and Alphabet. The semiconductor manufacturers had been buoyed by elevated demand for AI servers and data centers, positioning them as strong market performers in 2026. However, the recent retreat hints at a growing skepticism regarding whether these high levels of spending can deliver quick enough profitability to validate current stock prices, leading many investors to lock in gains amid this volatile landscape.

Additionally, the impact was felt globally, as South Korean memory-chip producers also faced notable losses, reflecting widespread apprehension about the durability of the AI rally. The sentiment was further amplified by declines in firms closely associated with AI, such as SpaceX, which saw its valuation drop significantly following a troublesome debut on the Nasdaq. This sharp decline raises questions about the robustness of AI-linked listings that had previously captured investor interest.

In this environment, the broader technology sector is showing signs of turbulence, as evidenced by six of the seven “Magnificent Seven” technology companies trading lower. This suggests that concerns regarding AI spending and high valuations are permeating the market, potentially signaling a pivotal moment for investor sentiment. The current market dynamics necessitate careful examination of upcoming earnings reports and the tangible impact of AI investments on revenue growth and profitability moving forward.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)