Focus of the sell-off: Global chip stocks plunge, $500 billion in market value "vanishes into thin air"

```

A global sell-off triggered by concerns over overvalued stocks amid the artificial intelligence boom is causing heavy losses for chip stock investors, with the industry’s market value evaporating by about $500 billion. Against the backdrop of interest rates potentially “remaining high for longer,” investors’ doubts about the industry’s profit potential and valuation levels are deepening, signaling that the strong AI-driven rebound since the start of the year is facing a severe test.

On Wednesday, this wave of sell-off accelerated in Asian markets. Dragged down by chip giants Samsung Electronics and SK Hynix, the Korea Composite Stock Price Index (Kospi) plunged as much as 6.2% intraday, marking the largest single-day decline since President Trump imposed comprehensive tariffs. In Japan, shares of semiconductor testing equipment maker Advantest Corp. slumped nearly 10%, pulling down the Nikkei 225 Index by over 4%.

According to data compiled by Bloomberg, following Tuesday’s drop in the Philadelphia Semiconductor Index, Asian chip stocks continued to fall on Wednesday, with the two major markets’ sell-offs jointly wiping out about $500 billion in market value. This sudden drop has made the previously record-breaking semiconductor sector—driven by the AI concept—suddenly "chilling to the bone."

This round of correction highlights just how fragile the AI-driven semiconductor stock rally has become after months of frenzied pursuit. Since the April low, investors have bet that demand for AI computing power will soar, adding trillions of dollars to chip makers’ market capitalization. Now, the market’s winds are shifting.

Valuation Pressure in the AI Boom

The latest wave of sell-offs stems directly from investors’ disappointment with corporate earnings, which has worsened concerns about “sky-high” valuations.

Although the AI boom continues, some key companies’ earnings guidance has failed to meet the market’s very high expectations. Palantir Technologies and Advanced Micro Devices (AMD) both suffered sell-offs after releasing earnings forecasts. After this year’s sharp stock price increases, any outlook that fails to impress is enough for investors to take profits.

Macro Headwinds and Spreading Pessimism

Besides worries over individual fundamentals, broader macroeconomic clouds are also pressuring the semiconductor industry.

Warnings from Wall Street executives that the market is “long overdue for a correction,” reduced market expectations for Federal Reserve rate cuts, and the protracted U.S. government “shutdown” have all combined to dampen market sentiment. These factors make investors more cautious when facing high-valuation sectors, especially amid an uncertain outlook for interest rates.

Some market watchers believe there is a lack of positive factors to support buying at present. “The entire market is a sea of red, painting a gloomy and damp risk picture,” said Chris Weston, Head of Research at Pepperstone Group. “We must keep an open mind that this sell-off could intensify further. Simply put, there are not many reasons to buy here right now.” His view reflects the growing pessimism in the market—until clear positive catalysts emerge, investors are tending to risk aversion.

Risk warning and disclaimerThe market carries risks, and investments should be made cautiously. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investing accordingly is solely at your own risk. ```