The rush to invest in artificial intelligence (AI) has temporarily halted, with share prices of many major technology firms closely linked to AI dropping in recent weeks. This downturn includes manufacturers of semiconductor chips.
In the past five days, all of the 'magnificent seven' US tech stocks, with the exception of Apple, have lost value. On Tuesday, South Korean tech companies SK Hynix and Samsung Electronics each saw declines of more than 10%.
Richard Hunter, head of markets at Interactive Investor, noted that investors are becoming more cautious about whether the substantial investments in AI will yield adequate returns and within what timeframe. Bola Onifade, portfolio manager at JP Morgan Personal Investing, added that other factors weighing on AI and technology stocks include the prospect of new IPOs from high-profile AI companies, China's progress with AI models, and the rise of Agentic AI, which could threaten software firms.
Despite the recent volatility, some AI-related stocks and indices have still seen significant gains this year. Nvidia's share price is up 4% since the start of the year, and Samsung is up 65%. The NYSE Semiconductor Index and South Korea’s KOSPI Index, which have high concentrations of AI and chip companies, are up by around 70% and 40% year-to-date, respectively, after giving up some earlier gains.