--- title: "Black Tuesday! Global Chip Stocks Plunge, SK Hynix Drops 13%, AI Returns Become Market's Biggest Concern" type: "News" locale: "en" url: "https://longbridge.com/en/news/294021290.md" description: "Global chip stocks faced a \"Black Tuesday\"—doubts over AI capital expenditure returns, NVIDIA's $750 billion+ \"circular financing\" clouding credit markets, and the listing of China's DRAM leader CXMT reigniting competition fears. These three pressures resonated to trigger panic selling spreading from Wall Street to Asia-Pacific. The former AI feast is turning into an ultimate question: \"The money is gone, where are the returns?\"" datetime: "2026-07-28T06:45:04.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294021290.md) - [en](https://longbridge.com/en/news/294021290.md) - [zh-HK](https://longbridge.com/zh-HK/news/294021290.md) --- # Black Tuesday! Global Chip Stocks Plunge, SK Hynix Drops 13%, AI Returns Become Market's Biggest Concern Cracks in the AI capital expenditure bubble are piercing chip stock valuations in the most violent way. Global chip stocks suffered massive sell-offs on Tuesday. Doubts about AI capital expenditure returns, fermenting concerns over NVIDIA's "circular financing," and rising competition from Chinese memory chips combined to ignite this "Black Tuesday," with panic selling spreading from Wall Street to Asian markets. The South Korean stock market bore the brunt. The Kospi index plummeted 10.76%, marking its largest single-day drop since 1998, triggering circuit breakers for the eighth time this year as intraday losses exceeded 8%. SK Hynix fell 14%; Samsung Electronics dropped 13.58%. The Japanese market faced simultaneous pressure, with the Nikkei 225 Index closing down 4%, Kioxia falling 18%, and Tokyo Electron and Nikon both dropping more than 9%. **The direct trigger for this sell-off was the market's dwindling patience regarding whether tech giants' AI capital spending could deliver returns.** Alphabet's stock fell more than 7% after reporting record quarterly profits last week, and the shockwaves have not yet subsided. Meanwhile, the "circular financing" model involved in NVIDIA's AI infrastructure transactions, exceeding $750 billion, has come under scrutiny in credit markets. This, combined with the listing of China's DRAM leader CXMT triggering a reassessment of the competitive landscape, created multiple headwinds that pressured chip stocks. ## AI Spending Doubts Ferment, Earnings Week Pressure Intensifies **The root of this sell-off lies in the shaking confidence of the market regarding whether massive AI investments can generate reasonable returns.** Last week, Alphabet raised its full-year 2026 capital expenditure forecast to between $195 billion and $205 billion, triggering investor alarm. The Philadelphia Semiconductor Index subsequently fell for three consecutive days, and U.S. stocks closed lower again on Monday, with AMD and NVIDIA among the top decliners in the S&P 500. The combined capital expenditures of the four tech giants—Alphabet, Microsoft, Meta, and Amazon—are expected to reach $700 billion this year, with Wall Street predicting this figure could exceed $1 trillion by 2027. Investors are finding it increasingly difficult to judge when and how these investments will translate into actual profits. Kyle Rodda, a senior analyst at Capital.com, stated bluntly in a report: **"These companies embody the core pressure of current market sentiment—excessive capital expenditure by AI companies, which investors fear will erode returns."** Risk events are densely stacked this week, further amplifying the market's nervous reaction. Microsoft, Meta, Apple, and Amazon are releasing earnings reports one after another, while the Federal Reserve, Bank of Japan, and Bank of England will announce interest rate decisions. More than 170 companies in the S&P 500 will report results this week. Chris Larkin from E\*Trade from Morgan Stanley pointed out, "Even if the Magnificent Seven deliver strong earnings, the market may not buy it, especially as AI spending levels continue to raise questions." Dilin Wu, a strategist at Pepperstone Group Ltd., summarized: **"The hurdle rate is currently extremely high; beating expectations no longer guarantees a stock price increase. We see this scenario repeatedly. Part of today's sell-off may be traders actively reducing positions before earnings reports."** ## "Circular Financing" Doubts Send NVIDIA CDS Soaring to Record Highs Another core trigger for this market crash is the concern over "circular financing" sparked by NVIDIA's unprecedented scale of AI infrastructure transactions. According to sources familiar with the matter speaking to media outlets, NVIDIA is negotiating with OpenAI to provide approximately $250 billion in financing guarantees to lock in data center computing power, while also discussing financing for a $350 billion project for OpenAI to purchase chips. Adding to the previously announced cooperation with the SK Group worth over $500 billion, the potential scale of AI infrastructure transactions involving NVIDIA has exceeded $750 billion. The core of market concern lies in the "circular" nature of this model—**NVIDIA provides financing or guarantees to customers, who in turn purchase NVIDIA's chips. If AI demand falls short of expectations, losses across the entire chain will be amplified.** Gary Tan, a portfolio manager at Allspring Global Investments, stated, "More and more capital is being used to fund future AI customers and infrastructure deployment." This concern erupted first in the credit market. According to ICE Data Services, **NVIDIA's five-year CDS rose by about 14 basis points intraday to approximately 82 basis points, marking the largest intraday increase for related contracts since active trading began last November. CDS prices for Oracle, Alphabet, Amazon, Meta, and Broadcom also rose to historic highs.** Manish Kabra, Head of US Equity Strategy at Societe Generale, stated bluntly: "For hyperscale computing companies, the focus is now on CDS, not EPS. AI capital expenditure continues to exceed cash generation speed, pushing tech groups' free cash flow to cyclical lows." NVIDIA CEO Jensen Huang holds a different view on the "circular financing" allegations. He stated in January this year: "The claim that this is circular financing is simply absurd." He believes these investments not only promote NVIDIA's own business but also bring investment returns. However, this statement has clearly failed to convince the credit market so far. ## Flood of AI Debt Supply, Bond Market Votes Against Expansion The credit market is also sounding alarms. In the first half of this year, U.S. investment-grade corporate bond issuance exceeded $1.2 trillion, hitting a new high since 2021, with supercloud service providers contributing about $200 billion. Lukasz Labedzki, a fixed income analyst at Franklin Templeton Institute, pointed out that this supply volume, combined with the U.S. government's massive borrowing needs, creates double pressure. AI-related bond spreads have widened significantly recently. **According to Bloomberg data, the 10-year AI debt spread is about 121 basis points, higher than the overall level of about 80 basis points for high-grade corporate bonds. The yield on 30-year U.S. Treasury bonds has remained above 5% for several consecutive weeks, marking the longest duration since 2007.** Oracle's situation is the most severe. After announcing it would invest $70 billion in data center construction over the next year, its credit rating was downgraded to BBB- by S&P Global, just one notch above junk status; Moody's also adjusted its rating outlook to negative. Alphabet's free cash flow turned negative for the first time in over twenty years since its listing last quarter, and its CDS consequently rose to a historic high of 67 basis points. **The latest financing cost for Meta's $12 billion data center project in Texas has approached junk bond levels.** John Aylward, Chief Investment Officer at Sona Asset Management, stated that the debt is "priced consistent with current B- rated bond trading levels... this is a quite surprising situation." David Brown, Co-Head of Investment Grade Global at Neuberger Berman, raised the market's core question: **"The biggest suspense is whether this level of capital expenditure will grow permanently, and when we will see the inflection point for a return to positive cash flow? We won't have answers in the short term, which explains the current weak performance."** ## Listing of China's DRAM Leader Reignites Competition Fears Another trigger for this chip stock plunge comes from changes in the competitive landscape of the Chinese memory chip market. CXMT, China's largest DRAM chip manufacturer, listed on the STAR Market of the Shanghai Stock Exchange on Monday. Its stock price closed up more than 465% on the first day, with a total market value exceeding 3.28 trillion yuan, instantly becoming the largest company by market cap in the A-share market. The IPO raised approximately 57.9 billion yuan (about $8.6 billion), making it the largest IPO in Asia this year. Global investors have begun to reassess the competitive prospects of the DRAM industry in the coming years. Market concerns are that as CXMT completes large-scale financing, its capacity expansion and R&D capabilities will significantly improve, potentially bringing traditional DRAM business into a phase of intensified competition earlier than expected, thereby compressing industry profit margins. **According to Reuters, Han Ji-young, an analyst at Kiwoom Securities in South Korea, pointed out that this round of sell-offs combines multiple factors, including AI infrastructure financing risks, the impact of China's low-cost open-source AI models on computing power demand expectations, and competition concerns triggered by CXMT's listing.** However, most analysts believe the market reaction involves some degree of overinterpretation. Currently, CXMT's products are mainly concentrated in traditional DRAM fields such as DDR4 and DDR5, while the fastest-growing businesses for Micron, SK Hynix, and Samsung come from AI memory products like HBM. Bernstein analyst Mark Li believes that the sector correction actually provides an opportunity for positioning, expecting global memory chip market revenue to still exceed $1.3 trillion by 2027-2028. ## This Week's Test: Dual Examination of Earnings and Central Bank Decisions The market has characterized this week as a concentrated stress test. Microsoft, Meta, Amazon, and Apple will release quarterly earnings reports on Wednesday and Thursday, respectively, with more than 170 companies in the S&P 500 reporting results this week; meanwhile, the Federal Reserve, Bank of Japan, and Bank of England will all announce interest rate decisions. In Asia, SK Hynix and Samsung will also be the first to submit their results. The core highlight of the earnings reports is singular: **Can AI investments be validated?** According to Bloomberg, citing UBS Global Wealth Management, "Limited visibility of capital expenditure beyond 2027, coupled with increased investor demands for spending discipline, may continue to suppress risk appetite." There are also unexpected variables on the monetary policy front. According to Bloomberg, Citadel Securities expects the Federal Reserve to unexpectedly raise interest rates this week. Frank Flight, Head of Macro Strategy, wrote in a report that a 25 basis point hike on Wednesday would strengthen Chairman Kevin Warsh's credibility in fighting inflation, while implying that policymakers are no longer relying on fully telegraphing every policy action in advance. Currently, traders are pricing in about a one-third probability of a Fed rate hike this week. Flight stated: "The market may once again be underestimating the extent of the Fed's hawkish shift." Chris Larkin from E\*Trade from Morgan Stanley summarized the current overall situation: **"This is a week full of potential surprises, both good and bad. Geopolitics and oil prices may be the biggest variables, but even if the Magnificent Seven deliver strong earnings, the market may not buy it, especially as AI spending levels continue to raise questions."** ### Related Stocks - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [SKHY.US](https://longbridge.com/en/quote/SKHY.US.md) - [NVDY.US](https://longbridge.com/en/quote/NVDY.US.md) - [NVD.US](https://longbridge.com/en/quote/NVD.US.md) - [NVDX.US](https://longbridge.com/en/quote/NVDX.US.md) - [NVDL.US](https://longbridge.com/en/quote/NVDL.US.md) - [NVDU.US](https://longbridge.com/en/quote/NVDU.US.md) - [NVDD.US](https://longbridge.com/en/quote/NVDD.US.md) - [NVDQ.US](https://longbridge.com/en/quote/NVDQ.US.md) - [NVDS.US](https://longbridge.com/en/quote/NVDS.US.md) - [07788.HK](https://longbridge.com/en/quote/07788.HK.md) - [07388.HK](https://longbridge.com/en/quote/07388.HK.md) - [688825.CN](https://longbridge.com/en/quote/688825.CN.md) - [NVDB.US](https://longbridge.com/en/quote/NVDB.US.md) - [NVDG.US](https://longbridge.com/en/quote/NVDG.US.md) - [NVDO.US](https://longbridge.com/en/quote/NVDO.US.md) - [NVDW.US](https://longbridge.com/en/quote/NVDW.US.md) - [NVYY.US](https://longbridge.com/en/quote/NVYY.US.md) - [NYYY.US](https://longbridge.com/en/quote/NYYY.US.md) - [DIPS.US](https://longbridge.com/en/quote/DIPS.US.md) - [MAGX.US](https://longbridge.com/en/quote/MAGX.US.md) - [SMH.US](https://longbridge.com/en/quote/SMH.US.md) - [SOXX.US](https://longbridge.com/en/quote/SOXX.US.md) - [SOXL.US](https://longbridge.com/en/quote/SOXL.US.md) - [SOXQ.US](https://longbridge.com/en/quote/SOXQ.US.md) - [XSD.US](https://longbridge.com/en/quote/XSD.US.md) - [PSI.US](https://longbridge.com/en/quote/PSI.US.md) - [FTXL.US](https://longbridge.com/en/quote/FTXL.US.md) - [03121.HK](https://longbridge.com/en/quote/03121.HK.md) - [09388.HK](https://longbridge.com/en/quote/09388.HK.md) - [SSNGY.US](https://longbridge.com/en/quote/SSNGY.US.md) - [8035.JP](https://longbridge.com/en/quote/8035.JP.md) - [7731.JP](https://longbridge.com/en/quote/7731.JP.md) - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) - [AMD.US](https://longbridge.com/en/quote/AMD.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [META.US](https://longbridge.com/en/quote/META.US.md) - [AMZN.US](https://longbridge.com/en/quote/AMZN.US.md) - [AAPL.US](https://longbridge.com/en/quote/AAPL.US.md) - [MS.US](https://longbridge.com/en/quote/MS.US.md) - [ORCL.US](https://longbridge.com/en/quote/ORCL.US.md) - [AVGO.US](https://longbridge.com/en/quote/AVGO.US.md) - [SCGLY.US](https://longbridge.com/en/quote/SCGLY.US.md) - [SPGI.US](https://longbridge.com/en/quote/SPGI.US.md) - [MCO.US](https://longbridge.com/en/quote/MCO.US.md) - [MU.US](https://longbridge.com/en/quote/MU.US.md) - [UBS.US](https://longbridge.com/en/quote/UBS.US.md) - [SMSN.UK](https://longbridge.com/en/quote/SMSN.UK.md) - [TOELY.US](https://longbridge.com/en/quote/TOELY.US.md) - [NVD.DE](https://longbridge.com/en/quote/NVD.DE.md) - [MS-O.US](https://longbridge.com/en/quote/MS-O.US.md) - [MS-Q.US](https://longbridge.com/en/quote/MS-Q.US.md) - [MS-E.US](https://longbridge.com/en/quote/MS-E.US.md) - [MS-I.US](https://longbridge.com/en/quote/MS-I.US.md) - [MS-L.US](https://longbridge.com/en/quote/MS-L.US.md) - [MS-P.US](https://longbridge.com/en/quote/MS-P.US.md) - [MS-A.US](https://longbridge.com/en/quote/MS-A.US.md) - [MS-F.US](https://longbridge.com/en/quote/MS-F.US.md) - [MS-K.US](https://longbridge.com/en/quote/MS-K.US.md) - [ORCL-D.US](https://longbridge.com/en/quote/ORCL-D.US.md) ## Related News & Research - [Nvidia's Potential $250 Billion OpenAI Financing Deal Is Reviving a 1990s Tech Bubble Habit, Analyst Warns: 'Usually Don't End Well'](https://longbridge.com/en/news/294077412.md) - [Nvidia supplier Wistron launches $700 million Texas factory for AI system production](https://longbridge.com/en/news/293413420.md) - [Tech coalition warns against sweeping artificial intelligence limits](https://longbridge.com/en/news/293799635.md) - [As Nvidia Discloses a 9.3% Stake in Nebius, Here’s How You Should Play NBIS Stock](https://longbridge.com/en/news/293504980.md) - [Mark Cuban and Michal Burry warn the AI boom is dangerously reliant on Nvidia](https://longbridge.com/en/news/294232031.md)