Chip Stocks Slide Again as Fitch Flags AI as a Major Credit Risk
A fresh selloff in memory and semiconductor stocks, a stark Fitch warning on AI-driven credit risk, and Amazon's retreat from its flagship AI models underscored growing unease even as AI data-center buildout kept accelerating.
Memory Stocks Get Hammered
Micron, SanDisk, Seagate and Western Digital fell roughly 7% in premarket trading Tuesday after Samsung, SK Hynix and Kioxia cratered 13-18% overnight in Asia. Traders pointed to reports that China is developing DUV lithography equipment that could flood the market, reports that Nvidia is preparing up to $750 billion in financing partnerships that revived circular-financing worries, and a leveraged unwind in Korea. The rout followed China's CXMT posting a nearly 470% first-day IPO jump, seen as unveiling a new chip competitor.
Ratings Agency Flags AI as a Credit Risk
Fitch's third-quarter Global Risk Outlook named a potential AI-related market correction as one of two dominant near-term credit risks, alongside the U.S.-Iran conflict. The agency noted the S&P 500's cyclically adjusted price-to-earnings ratio has climbed to levels near the late-1990s dotcom boom, while U.S. corporate bond issuance surged 26% in the first half of 2026, driven largely by AI-related fundraising.
Data-Center Buildout Continues Despite the Jitters
AMD signed a deal with Core Scientific for up to 2.5 gigawatts of data-center capacity, starting with more than 500 megawatts in 2027, sending Core Scientific shares up 6% premarket. Separately, Brookfield said it expects about 6.5 gigawatts of AI data-center capacity to come online in India over the next five years, on top of its own Digital Connexion venture, which already has 160 megawatts in the country.
Amazon Pulls Back on In-House Models
Amazon is winding down most of its flagship Nova AI models, including the Premier and Omni models and its Reel and Canvas generation tools, shifting resources toward a new frontier-model effort led by researcher Pieter Abbeel that is expected to debut at its re:Invent conference. The move follows recent job cuts in Amazon's AGI group as the company narrows its focus.
Sources
- Another Memory Massacre Is Inbound on Tuesday: Micron, SanDisk, Seagate See Large Premarket Losses (yahoo_finance)
- Morning Bid: Chip rout snowballs (yahoo_finance)
- What’s Behind the Selloff in Chip Stocks? (yahoo_finance)
- One Thing Weighing on Chip Stocks: China’s Reported Strides (yahoo_finance)
- Fitch warns AI market correction emerging as major global credit risk (yahoo_finance)
- Core Scientific signs AI infrastructure deal with AMD (yahoo_finance)
- Brookfield sees 6.5 GW of AI data-centre capacity coming online in India (yahoo_finance)
- Amazon winds down most flagship AI models in strategy overhaul, Business Insider reports (yahoo_finance)
Not investment advice.