CHIP STOCKS CRATER AS GLOBAL AI SELLOFF SPREADS

The downturn dragged major US indexes sharply lower, with chip sector losses outpacing broader market declines. The selloff originated in Asian markets before spreading westward, affecting companies at the center of the artificial intelligence boom. Investor skepticism appears focused on whether current valuations for chip stocks reflect realistic earnings potential from AI adoption. The sector has surged over recent months on expectations of sustained demand for processors powering AI infrastructure and applications. The decline comes as companies across the tech industry face pressure to demonstrate concrete returns on hefty AI investments. Market participants are reassessing growth projections and profit margins for chipmakers that have benefited from explosive demand. The broader selloff underscores volatility in tech equities following the sustained rally, with investors rotating out of names that have already seen substantial gains. Chip sector weakness typically signals broader market caution, as semiconductor performance often precedes general technology sector moves.