AI-related memory-chip stocks plunge as competition and valuation worries mount
AI-linked memory-chip shares fell sharply amid fears of Chinese competition, high valuations and rising financing costs.
A broad decline in AI-related equities accelerated on Tuesday, pulling South Korea’s Kospi down 5.5% and shaving more than 7% off the Philadelphia Semiconductor index. Memory-chip leaders Samsung Electronics and SK Hynix slumped about 7% and 10%, reflecting worries about intensified Chinese competition after CXMT Corp announced a rival breakthrough, as well as concerns over stretched valuations and higher interest rates.
Market participants, including Union Bancaire Privee’s Vey-Sern Ling and Lotus Asset Management’s Hao Hong, described investors as jittery and eager to lock in profits. Broadcom CEO Hock Tan warned that AI-focused investing resembles gambling and may face funding constraints. Analysts note that upcoming earnings from firms such as ASML and TSMC will be closely watched for signs of whether massive AI spending can deliver returns, while banks like JPMorgan and Goldman Sachs are curbing exposure to AI-related loans.
Why it matters
The downturn raises doubts about the profitability of massive AI investments and may tighten sector financing.
How this story developed
- Oct 2 Seoul market slips modestly as US stocks close higher
- Oct 5 Analysts expect Samsung Electronics to post operating profit of about 108 trillion won, driven by strong memory chip sales.
- Oct 8 Samsung disclosed a third‑quarter operating profit of 107.4 trillion won.
- Oct 8 The market recorded a third straight day of losses.
- Oct 13 The decline continued a multi‑day slide in the index.
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