The US stock market rally, fueled by the AI boom, is losing steam as investors evaluate rising tensions in the Middle East and reassess where to find value. The S&P 500 and Nasdaq Composite are down almost 2% and 5%, respectively, since their record highs on June 2.
Chipmakers’ Stocks Under Pressure
Chipmakers, which have been at the forefront of the AI rally, are now under pressure. The PHLX semiconductor index is down 15% since hitting a record high in late June. Micron Technology, a leading chipmaker, has dropped more than 20% since hitting a record high on June 25.
Despite the recent volatility, chipmakers remain well ahead for the year. Micron is still up more than 200% this year, and the PHLX semiconductor index is still up 75% this year. However, the bar for earnings expectations continues to rise, and investors are watching developments in the Middle East and their impact on oil prices and Treasury yields.
The so-called hyperscalers, or Big Tech companies like Microsoft, Meta, and Google, will be under a microscope as they spend enormous amounts of cash to scale up data centers and AI infrastructure. The market is looking beyond the buildout phase now and increasing the scrutiny on hyperscalers and others who are investing heavily in AI to make sure that the payoff is going to come.
Original reporting: KRDO (Colorado Springs metro) — read the source article.
