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Chip stocks slide after Broadcom boss likens AI investing to ‘casino’
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Semiconductor shares fell on Tuesday after Broadcom CEO Hock Tan likened many AI investors to casino gamblers and China’s CXMT reported progress on a new memory-chip architecture. South Korea’s Kospi index tumbled 6.25 percent as investors dumped chip stocks. Japan’s Nikkei fell 1.8 percent, Taiwan’s exchange lost nearly 2 percent, and TSMC declined similarly.
Samsung Electronics dropped 7.4 percent in Seoul, while SK Hynix slid 10 percent. Tokyo Electron fell 7.15 percent, and SoftBank Group, an OpenAI investor, lost 8.5 percent. US futures were mixed after the Nasdaq slipped 0.4 percent on Monday; Micron fell 3.9 percent, and Nvidia, AMD and Broadcom also declined.
The sell-off followed a report that China’s CXMT had made good progress on a new DRAM architecture. The design could boost memory density and challenge Samsung, SK Hynix and Micron, the world’s biggest memory-chip makers. CXMT, which debuted on Shanghai’s stock market in late July, makes DRAM chips used by AI processors.
Tan, speaking in Singapore, said the AI boom attracted investors who did not understand their bets. “A lot of investors have no clue what they are investing in,” he said, according to Bloomberg. They “set very extreme expectations only to find out that it’s almost like they are in a casino.”
The comments deepened concerns about an AI trade that has swung sharply in recent months. Investors worry about massive AI infrastructure spending, often funded by debt. OpenAI remains loss-making despite annualized revenues of $50 billion at the end of September.
Tan said that revenue suggested a viable business model but offered little guarantee of long-term profitability. He noted OpenAI still loses money because it spends heavily on training, and that much enterprise revenue comes from pilot projects. Crude oil prices dropped amid Middle East tensions, adding to the cautious mood.
