Shares of three major AI memory companies fell sharply Wednesday morning, extending losses from the session before. Micron, Sandisk, and Western Digital each dropped more than three percent, according to a report by Yahoo Finance. The broader semiconductor sector followed them lower.
The sell-off spread to Intel, AMD, and Broadcom, all of which also sank during the morning session. The decline reflects growing unease among investors about how long the AI infrastructure spending boom can continue.
Several factors drove the move. Renewed strikes between the United States and Iran rattled the broader market. Investors also showed disappointment after Samsung Electronics reported record profits earlier in the week but failed to move markets higher. The results, which many had expected to lift sentiment across the memory sector, instead prompted more selling.
A report from Reuters added to the pressure. Chinese AI startup DeepSeek is reportedly developing its own AI chip, raising fresh competitive concerns for established memory and chip suppliers. If DeepSeek and other Chinese firms build out their own chip supply chains, demand from those customers for products made by Micron and others could shrink.
The deeper worry behind all of it is whether the large cloud companies, often called hyperscalers, might eventually pull back on their AI infrastructure spending. Those companies have been the main engine driving demand for high-bandwidth memory, a specialized type of chip used in AI data centers. A critical shortage of that memory has pushed shares of Micron, Samsung, and South Korean chipmaker SK Hynix sharply higher in recent months. Wall Street analysts had expected supply constraints to persist through 2027.
Not everyone is ready to sell. Fundstrat analyst Tom Lee wrote in a note Wednesday, "We remain structurally bullish on AI and AI-related stocks and view this pullback as a buying opportunity."
The AI trade faces an additional test this week. SK Hynix plans to raise about 28 billion dollars through a United States-listed IPO. How that offering is received could signal how much appetite investors still have for AI-related stocks at current valuations.
The AI trade has been a major driver of earnings growth this year and has helped push the broader stock market higher. Wednesday's declines do not represent a collapse, but they reflect how quickly sentiment can shift when multiple sources of uncertainty arrive at the same time.
