Chip Stocks Slide Into Bear Market in AI Unwind: Markets Wrap
Semiconductor stocks have entered a bear market as investors grow concerned about the sustainability of AI-related spending. Market volatility has increased due to geopolitical tensions and fears that the rapid growth in AI investment may not yield immediate financial returns.
Why it matters
The downturn in chip stocks signals a potential shift in investor confidence regarding the long-term profitability of the artificial intelligence boom.
This content was published on July 18, 2026 - 00:03 4 minutes (Bloomberg) — A selloff in chipmakers gathered pace, driving the high-profile group of stocks to a bear market on worries that the artificial-intelligence spending spree is becoming harder to justify.
The cohort of semiconductor powerhouses saw its worst week since April 2025, with a key industry gauge sinking 20% from a record. A surprise breakthrough from Chinese AI startup Moonshot jolted the sector, which also joined broader equity losses on geopolitical tensions. The Nasdaq 100 lost 1.5%. Oil jumped as the US and Iran traded attacks again.
“Those who were hoping for a placid summer Friday were in for a rude surprise,” said Steve Sosnick at Interactive Brokers. “The ostensible reasons were renewed Persian Gulf jitters that pushed oil prices higher, while reports that a new, inexpensive Chinese AI model rekindled DeepSeek-like concerns about that industry’s economics.”
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