To The Moon

The AI trade is facing another serious test.

After Wednesday’s market rally, global stocks turned lower on Thursday as semiconductor shares suffered heavy losses. Qualcomm dropped around 9%, while the broader semiconductor sector came under strong selling pressure.

According to Reuters, the Nasdaq fell around 5.2%, the S&P 500 lost 3.4%, and the Dow dropped 2.2%. The semiconductor index also plunged around 11%.

This is more than a normal market pullback. Investors are starting to question whether the huge spending on AI infrastructure will deliver the returns that companies and markets are expecting.

1. Qualcomm’s results show that not every chip business is growing

Qualcomm’s latest results highlighted weakness in its traditional smartphone business. Its handset division revenue fell 26% to $5.14 billion, while chip segment sales declined 8% to $9.02 billion.

The company is also trying to expand into data-centre and automotive chips, but these newer businesses may take time to become large enough to offset pressure in its main handset market.

This is an important reminder: being part of the semiconductor industry does not automatically mean every company will benefit equally from the AI boom.

2. AI infrastructure spending is facing new questions

Another concern is the political environment in the US.

Following the midterm elections, investors are worried that greater scrutiny of data-centre projects could slow construction. Some newly elected officials have raised concerns about electricity costs, water use and the impact of large data centres on local communities.

This could affect companies supplying chips, servers, cooling systems and other data-centre equipment.

Even if demand for AI remains strong, delays in building new facilities could push back orders and revenue.

3. Is the market losing confidence in AI?

I don’t think the recent selloff proves that AI demand is disappearing.

Companies are still investing in AI, and demand for computing power remains an important long-term opportunity.

However, investors are becoming more selective. They want to see actual revenue growth, stronger cash flow and clear returns from AI investment rather than just large spending announcements.

For semiconductor companies, this means future growth will depend not only on demand for chips but also on whether customers can afford to keep expanding their infrastructure.

4. What stocks would I watch?

• $NVIDIA(NVDA)$ : Whether demand for AI accelerators remains strong despite concerns about data-centre spending.

• $Advanced Micro Devices(AMD)$ : Whether it can continue gaining market share in AI chips.

• $Qualcomm(QCOM)$ : Whether its smartphone business can recover and its newer growth areas can contribute more revenue.

• $Micron Technology(MU)$ : Whether demand for high-bandwidth memory continues to support earnings.

• $Broadcom(AVGO)$ : Whether demand for custom AI chips and networking products remains strong.

I would watch their next earnings reports, guidance and cash flow rather than simply looking for the biggest share-price rebound.

My view

The AI opportunity may still be real, but the market is changing its expectations.

During the early stages of the AI boom, investors were willing to pay a premium for companies connected to the trend. Now they want proof that the spending can generate sustainable profits.

I would not rush to buy every semiconductor stock after a sharp fall. Some companies may recover quickly, while others could face longer periods of weaker demand or lower valuations.

The key question is no longer just how much companies are spending on AI. It is whether that spending can produce enough revenue and profit to justify the investment.

For discussion purposes only. Not financial advice or a recommendation to buy or sell any security.