AI Sell-Off Wipes $1 Trillion From Chip Stocks

Top AI and semiconductor stocks have lost over $1 trillion in market value this week amid investor concerns about valuations, competition, and higher interest rates, with the Philadelphia Semiconductor Index down 12% from its early October peak. The sell-off began in South Korea, where SK Hynix and Samsung slid on valuation worries, then spread globally after Chinese chip firm CXMT reported progress on denser chip architecture. Hotter-than-expected September inflation data, with consumer prices up 3.7% and producer prices up 6.3%, has markets pricing a 92% chance of another Fed rate hike this year. Rising Treasury yields near multi-decade highs are fueling fears that government and hyperscaler debt will compete for capital, while Anthropic's revenue deceleration and concerns about overspending on AI capacity—with hyperscalers set to spend $800 billion on capex—have added to the gloom. JPMorgan strategists suggest a possible inflection point, noting chip stocks remain 15% below June highs.