Sharp falls in the value of chip makers have stoked investor concerns that the euphoria around AI-related companies is fading, according to the BBC.
Chip Stocks Lead the Sell-Off
Shares in Korean chip makers SK Hynix and Samsung are down 46% and 35% respectively over the last month, the BBC reported, as investors worry that the recent boom in demand for chips powering AI is unsustainable. The sell-off has spread to US companies: Micron fell 28% and Intel dropped 35% since last month. Meta shares are down 15% over the same period, while SpaceX — described by the BBC as predominantly an AI company — has seen its shares fall 14% from its IPO debut and nearly 50% from its June peak.
| Company | Last Month Change | 1-Year Change (where available) |
|---|---|---|
| SK Hynix | -46% | +5x (400%) |
| Samsung | -35% | +3x (200%) |
| Micron | -28% | Not reported |
| Intel | -35% | Not reported |
| Meta | -15% | Not reported |
| SpaceX | -14% (from IPO), -50% (from peak) | Not reported |
| Apple | +21% | Not reported |
"The AI bubble hasn't burst but it's letting out air," leading tech investor Eileen Burbidge told the BBC, as a number of factors in different parts of the AI ecosystem are darkening the mood.
China Breakthrough Adds Pressure
One trigger for the recent falls was a reported breakthrough in chip manufacturing by a Chinese company, potentially making China more self-sufficient in chip design and production, according to the BBC. That has added to lingering concerns that big AI companies — Meta, Alphabet, OpenAI, Anthropic — will find it hard to charge end users enough to justify the hundreds of billions being spent on chips and data centres.
Growing Concerns About AI Business Models
While increased spending on AI has historically been welcomed by investors in hyperscalers, the BBC noted that dialling up spending has recently not been met with former enthusiasm. Meanwhile, Apple — which has largely sat out the AI arms race — saw its shares rise 21% over the last month, reclaiming its title as the world's most valuable company from chip maker Nvidia. London's benchmark FTSE 100 index, which contains no major tech companies, briefly touched a record high on Wednesday morning.
The BBC also reported growing cultural opposition: a rising number of national, state, or local governments are pausing, banning, or restricting new data centre construction on environmental grounds, citing vast water and energy needs. High-profile AI advocates have been booed by students who fear AI will replace graduate-level jobs.
Circular funding is another concern. The BBC reported that some big AI companies have taken large stakes or lent money to each other, meaning that failures could have a damaging impact on others.
Mixed Signals and the Long View
Despite the sell-off, Burbidge remains positive. "I see the glass half full — if you bought shares in chip makers a year ago you are feeling pretty good right now," she told the BBC. Shares in Samsung and SK Hynix are up threefold and fivefold respectively over the last year, leading many to conclude that caution and profit taking after such massive gains was inevitable — and indeed healthy. But there is no doubt that investors are watching companies' spending plans and projections for when they get paid back with post-euphoric scrutiny.
For enterprise technology buyers, the BBC's reporting underscores the importance of scrutinising AI investments for clear ROI, as the market mood shifts from hype to hard-nosed business case validation.
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