AI-Fueled Tech Selloff Deepens as Chip Stocks Near Bear Market

When it rains, it pours. The artificial intelligence (AI) trade is being hit by a wave of negative developments, and the outlook appears increasingly uncertain.

Technology stocks declined sharply as investors reassessed AI-related valuations and semiconductor companies faced mounting pressure.

Semiconductor stocks are approaching bear market territory, with the PHLX Semiconductor Index (SOX) down 19% from its June peak, Callum Keown reported for Barron's Daily.

Memory-chip maker Micron Technology fell below a $1 trillion market capitalization for the first time in six weeks.

Since June 25, the company has lost $407 billion in market value—more than the combined market capitalizations of Qualcomm and Marvell.

Meanwhile, SpaceX reportedly fell below its initial public offering (IPO) price before an aborted Starship launch sent shares lower in after-hours trading.

The Magnificent Seven technology stocks also came under pressure. Alphabet fell 4.4% following reports that its flagship AI model, Gemini 3.5 Pro, is behind schedule. Meta Platforms, Amazon, and Nvidia also posted declines.

Adding to investor concerns, Beijing-based AI startup Moonshot unveiled a new open-source model that it said narrows the performance gap with Anthropic and OpenAI.