AI spending fears and China chip progress hit stocks

A selloff in semiconductor stocks deepened Tuesday as new signs of progress in China’s advanced chipmaking added to growing worries about the sustainability of the artificial intelligence spending boom. Investors are increasingly questioning whether the massive investments in AI infrastructure will deliver the expected returns. At the same time, reports show Chinese companies are making faster-than-expected advances in producing high-end chips, threatening the market share of established Western firms. The rout, which began last week, has erased billions of dollars in market value from major chipmakers. Analysts say the combination of debt-fueled AI spending and rising competition from China is creating a volatile environment for the sector. The selloff highlights a broader shift in investor sentiment, as the initial euphoria over AI gives way to more cautious assessments of its long-term profitability.