Global chip stocks reel as investor anxiety over AI spending intensifies

The rout intensified as Nvidia shares faced pressure following reports of circular financing involving OpenAI. Simultaneously, the market is grappling with the emergence of new rivals; China’s CXMT saw its shares surge nearly 470% during its debut, signaling a formidable new player in the chip space. In Europe, ASML faced a steep decline after reports indicated Chinese firms are successfully developing technology that mimics the Dutch giant’s core offerings.

Asian markets are feeling the brunt of this volatility. Seoul’s KOSPI index plummeted nearly 11% on Tuesday, marking its worst daily loss in five months. Major players Samsung Electronics and SK Hynix—which saw its shares fall below their recent debut price—are both scheduled to report quarterly results this week. These updates are expected to center on the massive capital expenditure required for AI infrastructure, a trend that is increasingly unnerving credit markets. Borrowing by Big Tech firms has already doubled compared to last year, raising concerns about the long-term sustainability of such high cash burn. Meanwhile, energy markets remain in focus as oil prices slid to $86 per barrel, providing a backdrop for the Federal Reserve’s two-day policy meeting, where markets are pricing in a one-in-three chance of a rate hike.