AI, chip stocks slide after weekend warnings undermine growth expectations

Selling pressure is hitting AI and semiconductor stocks hard, far exceeding the milder drops seen across the broader tech sector.

• Nasdaq Composite slipped 0.35%
• Nasdaq 100 dropped 0.60%

In contrast, a number of prominent AI, semiconductor and data-center stocks are suffering much steeper losses:

• Coherent tumbled 11.70%
• Astera Labs fell 10.78%
• Lumentum declined 9.88%
• Arm Holdings shed 9.01%
• Lam Research dropped 7.72%
• SK Hynix lost 7.67%
• Credo Technology slid 7.48%
• ASML eased 7.10%
• Marvell Technology retreated 6.74%
• Monolithic Power Systems gave back 6.59%
• CoreWeave dropped 6.41%
• Applied Materials fell 6.62%
• KLA Corp. slipped 6.37%
• Nebius declined 5.05%
• Micron lost 4.94%

What was the trigger over the weekend?

The downturn comes after prominent voices from Anthropic, OpenAI and xAI issued warnings regarding the dangers of fast-paced AI model development. Among the risks cited were:

• cybersecurity concerns,
• biological hazards,
• economic disruption,
• the possibility that AI is advancing faster than the industry can manage.

These statements have heightened expectations for a slower AI rollout, tighter regulation, and greater investment in safety and governance.

President Trump opposed any slowdown in AI development, contending it would hand an advantage to China, and labeled the concerns a HOAX. Still, the warnings sufficed to shake the market's bullish expectations for ceaseless AI expansion.

Why are chip and infrastructure firms suffering the most?

The hardest-hit firms are typically those most directly tied to the large-scale AI infrastructure expansion. Their businesses involve memory, networking gear, optical components, semiconductor fabrication tools, chip architectures, or data-center capacity.

Their valuations rest on several key assumptions:

• That AI companies will keep building ever-larger and more capable models.
• That hyperscalers will sustain their ambitious capital-expenditure programs.
• That demand for chips, memory, networking and data-center capacity will stay exceptionally robust.
• That governments will allow development to proceed without major interruptions or constraints.

The weekend cautions do not imply a halt in AI investment. No major capex plans have been cut so far, though one would not anticipate such a move (or wish to be the first). Nevertheless, they add a fresh risk to valuations that already bake in years of fast growth.

For market participants, the central issue is whether this is merely a sentiment-based pullback following a prolonged rally or the start of a fundamental rethink of AI expenditure. Keep an eye on the real capital-spending plans from Microsoft, Meta, Amazon, Alphabet and the top AI labs. (MSFT gained 2.32%, Meta rose 2.87%, Alphabet climbed 3.08%.) If those budgets are unchanged, buyers might later see the drop as a chance. Should spending be postponed or trimmed, the current selloff may signal something deeper.

Today's market action suggests investors are not fleeing tech overall. Rather, they are paring holdings in the names most reliant on the ongoing AI infrastructure surge.

As for AI bellwether Nvidia, its share price is lower but not among the worst decliners. The stock dropped 2.85% on the day, and is fluctuating around its 100-day moving average of $211.36 after approaching an all-time high of $236.54 on Friday, September 4.