AI Chip Stocks Slide as TSMC Capex Plans Spark Profit-Taking and AI Skepticism

Shares of AI chipmakers continued falling on July 17 as the SMH semiconductor index dropped 9.5% over the past month, with Applied Materials tumbling 5.5%, Sandisk falling nearly 4%, and Nvidia declining 2.2%. The selloff was triggered in part by TSMC's earnings report, which beat expectations but announced higher capital expenditure plans than previously forecast, weighing on the sector.

Why it matters: Analysts attribute the downturn to a combination of profit-taking after massive year-to-date gains—Sandisk up 471%, Micron up 197%—and growing AI skepticism amid expectations of a potential September interest rate hike that would raise borrowing costs for capital-intensive AI infrastructure.