Chip Stocks Shed $1.3 Trillion as Investors Question AI Spending Payoff

(WS News) – A sharp selloff in semiconductor stocks has wiped out more than $1.3 trillion in market value since early July, as investors grow increasingly skeptical about whether the enormous capital spending fueling the artificial intelligence boom will pay off as quickly as expected.

Intel has fallen roughly 21 percent over a stretch of seven trading days, while Micron and Advanced Micro Devices have each dropped sharply from recent highs. The declines followed a historic run for chipmakers, with the Philadelphia Semiconductor Index gaining nearly 65 percent in the first half of the year before shedding more than 20 percent of its value from its late-June peak. The selloff spread beyond the United States, with South Korea’s KOSPI index plunging nearly 10 percent intraday at one point, triggering circuit breakers as Samsung Electronics and SK Hynix each slid between 9 and 12 percent.

Analysts point to several triggers behind the reversal, including reports that Meta Platforms plans to build its own computing infrastructure rather than continuing to lease it entirely from cloud providers, a development that raised questions about future chip demand. Reports that Intel’s next-generation manufacturing process would not reach profitable production yields until late 2026 or 2027 further undercut investor confidence, undoing much of the optimism that had driven Intel’s stock up sharply earlier in the year.

Not every analyst views the pullback as a turning point. Morgan Stanley has characterized the decline as a “mid-cycle reset” rather than the end of the AI infrastructure buildout, and Wall Street’s average 12-month price targets still imply substantial upside for chipmakers including Nvidia and Micron. Investors are now watching earnings from Intel, due this week, for signs of whether the sector can stabilize after one of its most concentrated selloffs in years.