Semiconductor stocks are sliding sharply this week as Wall Street begins to question whether the record surge in AI capital spending can continue — a reset that has erased more than a trillion dollars in market value and pushed Intel down more than 20 percent. The Philadelphia Semiconductor Index is off 10.8%, the VanEck Semiconductor Index has fallen 13% over ten sessions, and the iShares Semiconductor ETF is down 8% in a single week. Reuters estimates roughly $1.3 trillion in semiconductor market value has been wiped out, with Intel, Micron, AMD and Samsung all under pressure.

The root cause of the decline is not a loss in demand; it is an amalgam of fears — doubt about the return on AI infrastructure spending, dot-com-level valuations and a more hawkish Fed, noted the Globe and Mail. In addition, hedge funds have profited from a bet on the decline in semiconductor stock prices for the last month, reported Reuters.

While semiconductor stocks are selling off in the short term, Wall Street’s 12-month price targets still imply substantial upside (Nvidia up 56% and Micron up 66%). However, Intel bucks this trend —........

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