AI chip stocks are falling, and traders are starting to question the trade

The AI chip boom is no longer moving in one direction. After an exceptional rally, semiconductor stocks linked to artificial intelligence have started falling across the US, Asia and Europe as investors reassess whether valuations have moved too far ahead of future growth expectations.

This is not a story about artificial intelligence losing relevance. It is a story about markets becoming more demanding after a period of extraordinary optimism. For more than a year, chipmakers have been viewed as the clearest way to gain exposure to the AI buildout, but that trade is now facing pressure from stretched valuations, crowded. . .