Chip weakness may signal fading AI profitability as defensive stocks rise

Weakness in semiconductor shares alongside gains in defensive sectors may be an early warning that expectations for AI profitability and broader market risk appetite are cooling. The simultaneous rotation out of chip stocks and into defensive shares warrants a fresh look at the earnings outlook for companies that have led the AI investment boom and at investors’ willingness to take risk. In an Oct. 14 interview with David Lin, Cameron Dawson, chief investment officer at NewEdge Wealth, said price action in the KOSPI and semiconductor shares could foreshadow changes before they appear in earnings forecasts. “Price leads data,” she said. Dawson said the KOSPI was oversold, along with parts of the U.S. semiconductor sector and Chinese technology shares, leaving room for a short-term rebound.

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