Chip Slump Drives Nasdaq Toward Correction Amid AI Investment Panic
The global semiconductor market is experiencing heightened volatility as the Nasdaq-100 approaches correction territory, driven by a slump in chip stocks. South Korea's Kospi saw its eighth circuit breaker of 2026 with an almost 11% drop on Tuesday, while U.S.-based semiconductors index SOX fell nearly 6%, marking four consecutive down days. Despite this panic, memory prices are rising—third-quarter DRAM contracts have increased by 20-30%. Major tech firms like Google and Meta have locked in long-term supply agreements. Analysts suggest the market's reaction is fueled partly by a surge in Chinese chipmaker CXMT’s stock price after its $8.6 billion IPO, as well as reports of China producing immersion DUV lithography machines—a technology previously dominated by ASML. However, experts argue these developments do not significantly disrupt current supply constraints due to export controls and the complexity involved with EUV lithography. Investor concerns also center on hyperscalers like Alphabet potentially overspending on AI infrastructure. Despite record profits from cloud services, Alphabet’s stock fell as investors focused on its increased capital expenditures.
Tickers: $ASML $GOOGL $META $MU
Topics: AI investment Chinese competition chip slump memory prices Nasdaq correction