Why global tech stocks plunge?

Chip supply shortage, Fed rate hike fears plunge tech stocks.

Tech investors famously impatient. Recently, impatience turn to disappointment. Huge AI investments fail to yield expected profit growth.

Nasdaq Composite, index for US tech stocks, drop 1.2% June 26. Index down all week, now 6% below June 2 record high.

Microsoft, Meta enter bear market, lose 20% from peak. Other "Magnificent 7" members (Amazon, Apple, Google, Nvidia, Tesla) enter correction territory, down at least 10% from recent highs.

Nasdaq index fluctuation over one year. Chart: Google Finance

Divergence clear in Apple, Micron performance. June 25, Apple announce MacBook, iPad price hikes due to memory chip shortage. Apple stock drop over 6%. Micron, memory chip maker, surge nearly 16% same session after beating earnings expectations on strong semiconductor demand.

Industry grows cautious. OpenAI consider delay IPO. Market volatility threatens $1 trillion target valuation.

South Korea Kospi index suffer same fate. Market trigger circuit breaker June 26, halt trading 20 minutes. Kospi close down 5.8%.

Kospi plunge led by tech giants SK Hynix, Samsung. Pair make up half of South Korea stock market value.

Kospi index fluctuation year-to-date. Chart: Google Finance

Investor caution justified. AI stock valuations high on tech potential, not real profit growth. Profit growth main driver for stock price.

Global AI demand rise. Industry growth force firms spend, borrow tens of billions for infrastructure, tech development. Financial results lag.

Traders on US stock market. Photo: Reuters.

AI investment spark data center boom. High demand for high-performance chips outpace semiconductor production capacity.

Chip shortage spike prices, split AI sector. Chipmakers win, stocks surge. Tech firms investing in AI models face price pressure from high costs, lagging profits.

Chip shortage, rising bond yields, Fed rate hike fears pressure tech sector. Tech stocks sensitive to high borrowing costs.