US Pullback as Tech and Semiconductors Weaken
US stocks have seen volatility recently, with technology and semiconductor shares turning weak. As of Oct 30, the Nasdaq Composite closed at 25437, down 747.72 points, or about 2.86%; the Philadelphia Semiconductor Index closed at 10688.80, down 829.40 points, or about 7.20%. Market discussion suggests this selloff may be more than a technical correction, with the market starting to question the returns on Big Tech's investments in artificial intelligence.
Returns on AI Capex at the Center of the Correction
A netizen wrote in a Dcard post that many investors recently held to the idea of being greedy when others panic and buying the dip on sharp falls, without thinking further about the reasons behind the decline. He believes the core of this correction is that tech giants such as Microsoft, Google, and Meta continue to commit massive capital spending, and the market is starting to question whether AI investment can deliver matching returns. If Wall Street's doubts about investment returns grow, the tech giants could be forced to cut or slow future capital spending.
The netizen further analyzed that if large tech companies reduce AI-related investment, it could first affect Nvidia's AI chip demand, putting pressure on its revenue and future outlook; TSMC's advanced-process and CoWoS advanced-packaging utilization could also be affected. In addition, Taiwan and Korea supply chains from memory, server ODMs, and cooling to ASIC chips could face overcapacity risks. The market has previously granted AI-concept stocks high P/E ratios, and once growth expectations cool, valuations could face a correction that cannot be fixed by simply saying a deep fall is bullish.
Investors Divided, Focus on Future Spending Plans
After the post surfaced, some netizens said that without leverage or margin financing one can buy gradually, depending on one's capital allocation. Others argued the current decline is not deep enough, because retail investors are still watching stocks and highly leveraged investors are still hoping for a V-shaped rebound, and the bottom only comes when retail investors dare not buy the dip. Other netizens held a different view, arguing the long-term AI trend has not changed, large tech firms are still building related facilities, and stocks always go through doubt and correction, so there is no need to panic without margin financing. Amid the diverging views, Big Tech's future capital spending scale and AI investment returns have become a continued focus for the market.