Chip Stocks Crash Into Bear Market as AI Frenzy Fades

A selloff in chipmaker stocks accelerated Tuesday, pushing the once-high-flying group into a bear market. The decline comes as investors worry that the massive spending on artificial intelligence is becoming harder to justify. A bear market is defined as a drop of 20% or more from a recent peak. The chip sector has now fallen past that threshold, ending a long rally driven by AI optimism. The selloff reflects growing doubts about whether companies will keep pouring money into AI chips and data centers at the same pace. Analysts point to slowing demand and rising costs as key concerns. This marks a sharp reversal for the industry, which had been a standout performer in the market over the past year.