AI Bubble Fears Roar Back, Slamming Chip Stocks

SPEAKER_1 (0:00)

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Kate Bullivant (0:32)

Semiconductor stocks tumble as fears over AI valuations come roaring back. Plus Wall Street opts out of a $20 billion US bailout for Argentina.

Chelsea Delaney (0:44)

There is a geopolitical reason for why Trump wants to help Argentina, but Wall Street wants its money back. And so I think that's where these plans have fallen apart.

Kate Bullivant (0:56)

And China prepares its people and the world for a new pressure campaign on Taiwan. It's Friday, November 21st. I'm Kate Bullivant for the Wall Street Journal. And here is the AM Edition of What's News. The top headlines and business stories moving your world today. We're exclusively reporting that a planned $20 billion bailout from US banks to Argentina has been shelved as JPMorgan Chase, Bank of America, and Citigroup pivot to a smaller short-term loan package instead. Markets reporter Chelsea Delaney has been covering the US bailout of Argentina and says instead banks are proposing a short-term $5 billion loan package to help cover a debt repayment in January.

Chelsea Delaney (1:44)

So the real sticking point in these negotiations has always been security for the banks lending this money to Argentina. $20 billion is a lot of money and Argentina is a serial defaulter. It's defaulted nine times on its sovereign debt. So there is a legitimate risk that Argentina will not be able to pay back this debt. So the banks going into this, they wanted either Argentina to give them collateral that they could use if it's not able to pay back the debt or the US Treasury Department to guarantee it. That seems to be where these negotiations have fallen apart.

Kate Bullivant (2:18)

Parts of the bailout are still going ahead. But, as Chelsea explains, there's a mismatch between what the Trump administration wants and what Wall Street is willing to do.

Chelsea Delaney (2:28)

The US in a separate agreement has this $20 billion currency swap agreement with Argentina. And Javier Malé and Trump have this bromance. They agree on a lot of economic principles. And so there is sort of a diplomatic geopolitical reason for why Trump wants to help Argentina. But Wall Street clearly does have some concerns about making a really big push into lending money to Argentina.

Kate Bullivant (2:56)

Meanwhile, semiconductor stocks have tumbled in Asia on renewed fears of an artificial intelligence bubble, tracking declines in US chip stocks overnight. Shares in Samsung and SK Hynex, the world's two largest memory chip makers, slumped as much as 6 and 10 percent respectively. Kimberly Kao covers Asian markets for Dow Jones Newswires.

Kimberly Kao (3:19)

What we are seeing over actually the past two days is that Asian markets are getting whipped out between the caution and optimism around AI demand. For markets like South Korea and Taiwan, where there's Nvidia suppliers, those semiconductors actually dominate the benchmark weights, which also explains why those markets get caught between these strings. But today, investors are again becoming increasingly nervous about the risk of an AI bubble, which is what's causing market volatility, not just this week, but also in recent weeks. For example, in Bank of America's latest monthly survey, it showed that an AI bubble was cited as one of the top risks by about 45% of institutional investors.

Kate Bullivant (4:10)

For more on this, we've got a special bonus episode coming later today. In the latest What's News in Earnings, we'll take a look at how chip makers are raking it in and why markets can't decide if fears of an AI bubble are real or overblown. That will be in the feed around midday and we'll have the PM What's News after that as usual.

The Transportation Department has announced that the 776 air traffic controllers, with perfect attendance during the government shutdown, will receive a $10,000 bonus. And at least 400 other technicians and workers in the union are also on track to receive bonuses, according to the professional aviation safety specialists. At the same time, Transportation Secretary Sean Duffy told Fox News that some Federal Aviation employees could be penalized for not coming into work. The head of the union, Nick Daniels, said earlier this week that controllers weren't missing work out of protest but because they were unable to pay for childcare. The FAA didn't comment on whether air traffic controllers who called in fatigued would be eligible for the bonus. And Paramount, Comcast and Netflix have submitted non-binding bids to acquire Warner Bros. Discovery. Paramount is seeking to buy the entire company, including cable networks like CNN, while Comcast and Netflix are only bidding for the studios and streaming assets. Warner Bros. is also moving forward with plans to separate its assets. And any potential deal is expected to face significant regulatory scrutiny. Coming up, China is ramping up a new pressure campaign on Taiwan. We look at how Beijing is using its so-called pen and gun strategy after the break.