Strategist: AI Trade Cooling but Chipmakers Quietly Winning

Amid global market volatility, Jay Woods, chief strategist at Freedom Capital Markets, argues that the artificial intelligence trade is losing momentum, but semiconductor companies are still quietly gaining.

Details

South Korea's Kospi index suffered a sharp drop of nearly 10% in a session local media called "Black Tuesday," as foreign investors dumped semiconductor shares, triggering circuit breakers. The selloff spread to US chip stocks in sympathy.

Speaking on CNBC, Woods said AI remains an important theme, but elevated valuations are prompting investors to reassess their positions. He noted that companies like Broadcom (AVGO), Micron (MU), and Microsoft (MSFT) are benefiting from sustained demand for specialized chips and cloud infrastructure.

Context

The comments come after a period of excessive optimism around AI, which drove many related stocks to high levels. However, signs of slowing data center spending and increasing competition have led some investors to take profits.

What This Means for Investors

Despite the temporary cooldown, fundamentals remain strong for chipmakers that provide real added value. Woods advises investors to focus on companies with solid fundamentals rather than speculating on news.