AI Trade Stumbles as Chip Stocks Slide

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.

**Ed Ludlow** (0:22)
This is Bloomberg Tech, coming up, a sell-off in chip stocks drags the NASDAQ 100 near correction territory after signs of progress in China's chip making add to worries about the sustainability of the AI spending boom. Plus, SpaceX shares have raised one-fifth of their value since the record-setting debut of Musk's company as investors start to avoid riskier tech firms. And Apple briefly becomes just the second company ever to achieve a $5 trillion market valuation. We got the deets.
It is a tech wreck. The NASDAQ 100 is flirting with correction territory. There are concerns about AI spending in a big week for tech earnings, particularly on the hyperscaler side. But semiconductors are a big part of it as well. The Philadelphia Semiconductor Index or SOX, down for a four-straight session, its lowest level since May. That's its longest run of declines, going back some time.
Then there's the single names. SpaceX is the top story for us today. $1.2 trillion of value. Yep. $1.2 trillion of value erased from the peak it hit just days after its IPO at $135 a share. We didn't get the details. It is semiconductors that are the focus right now. China's chip industry is giving investors a reason to pause. These signs of progress are raising fresh questions about whether Beijing is catching up faster than expected. Bloomberg's Peter Elstrom, who leads our coverage of Asia Tech, is with us. That's one factor. You see that in European trading of ASMR. You see it carried over into the US session. But the market is paying close attention to what China is capable of doing in its domestic chip industry.

**Peter Elstrom** (2:04)
Yeah, that's right. Ed, as you know, as you've talked about many times on this show, we've had these valuations in the AI industry that have gone up and up and up and up. And now we're seeing them start to come back down with some additional momentum, as you were referring to earlier. I think there are a few different areas where we've seen causes for concern. Part of it is capex spending. We saw Alphabet report last week. They said they were going to raise their capex.
That hit their stock pretty hard. A few months ago, that would have helped their stock. And in fact, this time it was the reverse. I think when it comes to the China competition, there are concerns on a number of different fronts. Moonshot, of course, gave us a wake up call that the AI models in China are very good. It's not just DeepSeek. You also have Moonshot, you have Alibaba. You actually have quite a few of them that are very strong. There was this report that you're alluding to that the Chinese are actually making progress in lithography, the machines that are used to make chips. That would hit ASML in particular, and may be able to provide more cost-advantages machines for China. And then on top of that, you had CXMT go public this week. I think this week, maybe you haven't talked about enough. This is really the fourth big memory chip maker out there. It's going to compete with SK Hynix and Samsung.
It went public this week in China.
Their market value is $460 billion. It's already the most valuable company listed in China. It may soon become the most valuable listed Chinese company anyplace. So that's putting pressure on SK Hynix and Samsung, and Micron in particular, these stocks that have just been on a tear recently. So add that up, and there are some concerns.

**Ed Ludlow** (3:36)
Bloomberg's Peter Aylstrom, executive editor for Tech in Asia. Thank you so much. The sell-off in AI and chip stocks is now hitting one of the biggest names in the market, and that is SpaceX. SpaceX shares have fallen 20% below their IPO price. That's more than $1.2 trillion of value erased since last month's peak, which was just within four days or four trading sessions of the listing. Bloomberg's Bailey Lipscholtz tracking the story. A lot of traffic on this one straight away.
On the sell side, everyone's pretty bullish on SpaceX, but in the weeks that have followed that IPO, it's been a downward trajectory.

**Bailey Lipscholtz** (4:13)
And we've seen kind of a war, if you will, with short sellers piling in. About 30% of the shares are sold short, so shorts are making a lot of money. To your point, the sell side came out very optimistic, unsurprisingly, because either their banks worked on the IPO and made it pretty hefty fees, or they want to kind of cozy up to SpaceX management and be able to tout relationships. The big question now is, what has fundamentally changed about the story? After Friday's successful Starship launch, kind of a step in the right direction. The big debate, though, as you mentioned, we're seeing a lot of the steam coming off the market, writ large. We're seeing the likes of SK Hynex and other big IPOs from this year trading well below their IPO price. So when you go back to SpaceX, you say, how much did that $1.77 trillion valuation at IPO make sense? And how does the company deliver from here? Especially because we will get their first earnings report in early August. In August 6, two days after that, we're going to have a lot of shares potentially unlocked for sale. So investors are really clamoring for how to best position ahead of those earnings. The first time we'll hear from the management team in a formal setting, and also what happens when north of 900 million shares potentially are unlocked just two days afterward.