The Nasdaq-100 index has officially entered correction territory, registering a decline of over 10% from its recent highs. This significant market movement is predominantly fueled by a widespread selloff in global chip and memory stocks, signaling a shift in investor sentiment regarding the future of artificial intelligence investments.
The current downturn appears to be a reassessment of the massive investments poured into AI and related technologies. While semiconductor companies have experienced substantial growth due to soaring demand for AI infrastructure over the past two years, the market is now questioning whether current valuations adequately reflect future growth potential. This uncertainty has triggered a broad-based selloff, impacting major players across Asia, Europe, and North America. In Asia, South Korea's Kospi index experienced a sharp decline, with shares of Samsung Electronics and SK Hynix plummeting. European markets also saw significant drops, with companies like ASML facing pressure amid concerns about increasing competition from China in advanced chip manufacturing technology.
In the United States, leading semiconductor firms including Nvidia, AMD, and Intel have all traded lower. The VanEck Semiconductor ETF (SMH) has mirrored this trend, experiencing its worst monthly performance since 2022. The selling pressure has extended beyond direct chip manufacturers, impacting related sectors and highlighting the interconnectedness of the global technology supply chain. Investors are grappling with the sustainability of AI spending and the capital requirements needed to maintain the current growth trajectory, leading to increased volatility across the tech-heavy Nasdaq-100.
