Global Tech Stocks Plunge Amid AI Profitability Doubts and China's Chip Advances

Global technology stocks experienced a sharp sell-off on July 28–29, 2026, driven by investor concerns over the sustainability of massive artificial intelligence investments and reports of China's progress in semiconductor manufacturing. South Korea's KOSPI index fell 10.8% on July 28, triggering circuit breakers twice, with further declines on July 29 as the index fell as much as 12% intraday. Samsung Electronics and SK Hynix each declined more than 13%, with SK Hynix falling as much as 20% during the two-day rout. The Nasdaq 100 dropped nearly 2%, while major chip stocks globally—including Intel, Advanced Micro Devices, SanDisk, and Western Digital—fell 4–11%. Japan's Nikkei 225 declined approximately 4%, with memory chip maker Kioxia falling over 18%.

The sell-off intensified following two key developments. On Monday, July 28, Nvidia fell 5% after the Wall Street Journal reported it was in talks to provide approximately $250 billion to OpenAI for a massive data-centre project in Ohio. This news prompted concerns about circular funding within the AI industry—where tech companies finance one another—and sparked questions about whether massive AI spending could generate sufficient returns. Simultaneously, China's CXMT (ChangXin Memory Technologies) surged nearly 466% on its Shanghai debut on July 28, raising global concerns about intensifying competition in the memory chip sector, which is critical for AI systems. Reports indicated China had begun mass production of deep ultraviolet (DUV) chip-making tools, technology previously dominated by Dutch firm ASML, signalling potential disruption to global semiconductor supply chains.

The collapse in chip stocks resulted in Nvidia losing its position as the world's most valuable company to Apple, which has risen approximately 25% this year and is seen by some investors as less exposed to uncertain AI spending returns. Analysts noted that the market's willingness to capitalize on AI promises at inflated valuations had shifted. Morningstar analyst Jing Jie Yu stated that the market was "likely spooked by the progress of China's chip-making equipment capabilities" and warned that the sell-off was "largely a kneejerk reaction and overdone." However, others cautioned against buying the dip, with Swissquote analyst Ipek Ozkardeskaya noting that Nvidia's credit default swap spreads spiked, suggesting elevated risk perception.

The two-day rout reflected mounting doubts about the AI industry's business model at a time when governments and companies are spending hundreds of billions of dollars on developing AI capabilities. Recent earnings announcements from Tesla and Alphabet had heightened investor concerns by disclosing substantial AI capital expenditure requirements. SK Hynix's earnings on July 29 showed strong revenue and operating profit growth, but remained below market expectations, further dampening sentiment. South Korea's retail investor base, which has grown significantly in recent months, amplified market volatility through leveraged trading positions.

The decline extended globally, with Taiwan's Taiex falling approximately 4% and Hong Kong's Hang Seng edging 0.1% lower. Europe's major indices proved more resilient, with the FTSE 100, CAC 40, and DAX 40 each rising around 0.6%, reflecting lower exposure to AI-heavy sectors. Oil prices fell more than 1% amid broader market weakness, though prices remained elevated due to the ongoing Iran-United States conflict in the Middle East. Market participants await earnings from Microsoft, Meta, Apple, Amazon, and TSMC to gauge whether tech spending plans and profitability justify current valuations.