Tech stocks tank on Wall Street. Is the chip bubble finally popping?

Tech stocks continued their slide Tuesday, stoking concerns that the long-feared collapse of the AI and chip rally could be near. But some traders on Wall Street say this is only a bump in the road. The Nasdaq Composite Index was down 475 points, or nearly 2%, as of 9:45 a.m. ET Tuesday, after dropping 1.3% on Monday. Shares of major chipmakers were broadly lower, some substantially so. The sell-off that began Monday gathered steam overnight, as global markets in Asia took heavy losses on plunging memory-chip stocks. South Korea’s Kospi index, which has been the best-performing index in the world since the start of 2025, tumbled 10%, triggering a 20-minute trading halt. The Kospi drop was driven largely by sharp declines in Samsung and SK Hynix, which were both down 12%. The volatility rattled investors in Europe, where semiconductor companies including Switzerland’s STMicroelectronics, Germany’s Infineon, and ASML, based in the Netherlands, also lost ground. Despite the global sell-off, analysts said they are not concerned about the overall health of the market and do not believe this is the long-warned popping of the AI bubble. “The AI beneficiaries [have] captured kind-of the zeitgeist of the momentum traders and when that happens, you’re going to have sharp sell offs like we’re having. I’d argue it’s healthy,” said Andrew Slimmon, a senior portfolio manager at Morgan Stanley Investment Management, on CNBC’s Squawk Box. At the heart of the sell-off appears to be growing concern about cash flow for these companies. Many AI companies still lack a clear growth narrative, and investors are getting twitchy. At the same time, the threat of interest rate hikes by the Federal Reserve could make it harder for those companies to find additional funding. In the past, a one-day drop like the one the market is seeing Tuesday morning would likely have sparked panic among investors. But in the years since the pandemic, such swings have become more common and a