AI CHIP SELL-OFF DEEPENS AS INVESTORS FLEE

The sell-off in artificial intelligence stocks accelerated Tuesday, with major semiconductor manufacturers bearing the brunt of investor retreat. Samsung and SK Hynix both fell more than 10% as part of the broader pullback. The decline pushed South Korea's composite index to its lowest point in 12 weeks, reflecting broader market anxiety about the sector's fundamentals. Investor concerns center on the mounting debt loads AI companies are taking on to fund massive datacentre expansion. As firms race to build out infrastructure to support AI applications, they've increasingly relied on borrowed capital—a strategy now drawing scrutiny from the market. The timing coincides with renewed competitive pressure from China, where domestic chip manufacturers continue advancing their capabilities. This dual pressure—domestic financial stress and external competition—has spooked investors betting on continued AI sector growth. The chip sector, long viewed as a cornerstone of AI infrastructure investment, now faces questions about sustainability. Whether current spending levels can justify the valuations these companies command remains a critical question for market participants reassessing their positions. The sell-off signals a potential shift in investor sentiment around AI infrastructure plays, at least in the near term. How long the pullback lasts will likely depend on whether companies can demonstrate that their datacentre investments generate adequate returns.