AI Growth Slowdown Sparks Semiconductor Decline... Sharp Drop Unlikely

Semiconductor stocks continued their decline on Monday following warnings of slowing artificial intelligence (AI) growth by Anthropic CEO Dario Amodei. The Philadelphia Semiconductor Index fell as much as 5.9%.

Nvidia dropped 3.4%, Broadcom nearly 5%, and Micron and AMD both fell more than 4%. The Nasdaq 100 index also declined up to 1.3%, reigniting debates about potential larger corrections for AI-related companies.

According to Seoul Economic Daily, SK Hynix in South Korea also dropped around 7.6%, mirroring similar movements in the U.S. amid linked investments in AI infrastructure. Like their American counterparts, SK Hynix faced difficulties due to concerns over AI safety. Amodei's essay argued that advanced AI systems risk escaping human control without careful safeguards, a view supported by OpenAI's Sam Altman and xAI's Elon Musk.

Not all analysts see this as the start of a major downturn. Bank of America semiconductor analyst Vivek Arya called the reaction 'background noise,' noting that the semiconductor index remains trading at about 19 times future earnings, similar to the S&P 500. However, profit growth is accelerating roughly seven times faster than the broader market. By 2026, the semiconductor index had already risen 67%, making Monday's decline relatively minor.

Other investors see greater instability. BeInCrypto previously raised concerns about Nvidia acting as both a chip supplier and a financial provider for its own AI customers, creating a circular financing structure. Some compare this to vendor financing seen before the dot-com bubble.