US Stocks Plunge on Profitability Concerns Over AI Industry, Semiconductor Shares Tumble
Shares of semiconductor companies on Wall Street plunged in a single day as concerns grow over the profitability of the AI industry. The tech-heavy Nasdaq index fell more than 2%, bringing its cumulative losses this week to over 4% — the steepest since June. Semiconductor companies AMD and Micron tumbled more than 5%, and SanDisk dropped over 6%.
Behind the sell-off are doubts about the returns on AI investments. U.S. big tech companies are pouring vast sums of money into building AI data centers, and questions are mounting over whether such spending will actually translate into profits. AI cloud company CoreWeave's total debt stands at $51 billion, or roughly 68 trillion won. Its stock fell 12% in a single day and 26% this week alone.
Cho Young-moo, director of the NH Institute for Financial Research, pointed out: "Future earnings are yet to materialize, and financial markets are relying on borrowed money. There is anxiety over whether AI profits will be able to cover these costs."
Amid the worsening Middle East conflict, international oil prices topped $100 per barrel overnight. The U.S. consumer price index for September already exceeded market expectations. Rising interest rates tend to weigh on stock markets and increase financing costs, deepening doubts about the AI industry's profitability.
The Korean stock market swung between sharp losses and gains last week amid AI industry concerns. Park Sang-hyun, a senior analyst at iM Securities, said, "A significant portion of the risk has been priced in, and the steep decline has brought us near a bottom. There may be further corrections, but I expect them to be limited." Earnings reports and outlooks from U.S. big tech companies, including Meta, will be released starting next week.
