Chip bubble bursting as AI spending fears go global — short the semiconductor rally
After a massive quarter-long surge, semiconductor stocks are abruptly falling as global AI spending anxieties spread from Wall Street to Asian markets. Meta's pivot to sell compute capacity is spooking investors who fear an oversupply of AI chips.
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The semiconductor sector is unraveling after a record-breaking quarter where it swelled to nearly 20% of the S&P 500's value. The panic started with Wall Street chip giants like Micron losing $200 billion in value in a single day and has now violently spread to Asian markets, dragging down Samsung and SK Hynix by over 7%. The root cause is a growing fear that AI computing capacity is becoming oversupplied—triggered by Meta announcing plans to sell compute power. This jittery sentiment is rapidly infecting the entire global supply chain, creating strong downward momentum.