Investors Turn Against AI: Significant Losses for Chip Funds

The recent AI euphoria in the stock market has hit a significant setback, with a notable sell-off in Asia as a direct consequence. While the South Korean stock market lost nearly 8 percent, the Dutch chip funds on the Damrak followed suit with significant losses. ASML, ASMI, and Besi, which have all greatly benefited from the rise of artificial intelligence, saw their share value drop by up to 8 percent. The AEX index, which reached a record high on Wednesday, saw a substantial decline on Thursday.

At the opening, the AEX already lost 1 percent and later recovered to a loss of 0.8 percent. The loss was particularly felt at the largest chip funds: ASMI suffered a loss of 7.8 percent, making it the largest decliner within the AEX index, while Besi and ASML lost 5.2 and 4.8 percent, respectively. In contrast, KPN rose by 3.6 percent, making it the largest gainer in the index amid the predominantly negative trend among tech companies in Europe.

Asia set the tone with significant losses for chip companies. The KOSPI index in South Korea lost nearly 8 percent and major players such as Samsung Electronics and SK Hynix saw their share value decline by ten percent or more. Despite record profits from TSMC, which recently announced a profit increase of 69 percent, the company could also not escape the downward trend. These declines indicate the bleak mood among investors who express their concerns about high inflation in the United States, which impacts interest rates and thus the financing of AI projects.

Rising inflation has raised questions about the valuation of AI stocks; higher interest rates make borrowing more expensive and future profits less attractive. Experts, such as Charu Chanana from Saxo Bank, characterize the situation as a revaluation of capital. This has led to growing concerns about a potential AI bubble, with analysts pointing to the recently decreased growth of companies like Anthropic and warnings from chip manufacturer Broadcom. Nevertheless, not all analysts are pessimistic; some remain optimistic about the stock markets given the ongoing economic growth and sustained demand for AI technology.

For investors in the Netherlands, this serves as a clear reminder of the Damrak's dependence on AI. The movements of ASML, ASMI, and Besi, as core players, are increasingly linked to confidence in AI, raising the question of whether that confidence has gone too far.

Read the full article from AI Insider.