Chipmakers Enter Bear Market as AI Spending Fears Deepen – US Market Wrap

A sharp selloff in semiconductor stocks accelerated, pushing the sector into a bear market as investors questioned whether the artificial-intelligence spending boom can continue to justify elevated valuations.

Chipmakers suffered their worst weekly decline since the tariff-driven turmoil of April 2025, with a key semiconductor index falling 20% from its record high. Sentiment was hit by a breakthrough from Chinese AI startup Moonshot, which intensified concerns about rising competition. Broader equity markets also came under pressure as renewed geopolitical tensions weighed on risk appetite. The Nasdaq 100 fell 1.5%, while oil prices climbed after the US and Iran exchanged fresh attacks.

The semiconductor sector had only recently completed its strongest quarter on record, fueled by relentless demand for AI-related investments. However, volatility has returned as investors reassess the sustainability of that rally amid concerns over increasing competition, the potential for excess capacity, and whether the industry’s enormous capital spending will ultimately deliver sufficient returns.