Tech stocks tank on Wall Street. Is the chip bubble finally popping?

Technology stocks continued their decline on Tuesday, with the Nasdaq Composite Index down 475 points, or nearly 2%, by 9:45 a.m. ET. This follows a 1.3% drop on Monday, intensifying concerns about a potential collapse of the artificial intelligence and semiconductor rally. Major chipmaker shares experienced broad declines, with significant drops observed. The sell-off gained momentum overnight, impacting global markets, particularly in Asia, where South Korea's Kospi index, previously the world's best-performing index since the start of 2025, tumbled 10%, leading to a 20-minute trading halt. This sharp decline in the Kospi was largely attributed to substantial losses in Samsung and SK Hynix, both down 12%. European semiconductor companies, including STMicroelectronics, Infineon, and ASML, also saw their stock values decrease. Despite the global market volatility, some analysts remain unconcerned about the overall market health, viewing the sharp sell-offs as potentially healthy corrections. Andrew Slimmon, a senior portfolio manager at Morgan Stanley Investment Management, stated on CNBC that such movements are expected when AI beneficiaries capture the momentum trader zeitgeist. Underlying the current sell-off are increasing investor concerns about the cash flow of AI companies, many of which still lack a clear growth narrative. Additionally, the prospect of interest rate hikes by the Federal Reserve could complicate funding for these companies.