AI chip sell-off erases $1.3 trillion in market value as analysts warn of potential bubble - National & International News -

AI chip sell-off $1.3 trillion in market value as analysts warn of potential bubble

On Thursday, tech company Broadcom released a report showing that demand for its AI chips had fallen well short of expectations. The revelation sent a shockwave through the largely tech-driven stock market, prompting a sell-off of stocks amounting to $1.3 trillion. This was a 10% loss in the PHLX semiconductor index, which tracks the 30 largest semiconductor companies listed in the US.

When concerns are raised about the US economy, Trump officials, including Treasury Secretary Scott Bessant, often point to the booming stock market to quell fears of a downturn. Stock market performance is a poor indicator of how the average American is doing financially. Apart from that, the current stock-market boom has largely been driven by massive investment in AI companies. This has sparked fears of a possible AI bubble similar to the Dot Com bubble of the early 2000s. As of April 2026, AI-linked stocks accounted for 45% of the S&P 500.

Despite Friday’s massive correction, analysts do not believe that the bubble has peaked yet, nor that a burst is imminent. However, this problem deserves attention since, while a booming stock market doesn’t necessarily translate to gains in the wider economy, a crash can have devastating consequences.