Is AI facing a big financial reckoning?

Is AI facing a big financial reckoning?Image source, AFP via Getty ImagesBySimon JackBusiness editorPublished1 minute agoSharp falls in the value of chip makers have stoked investor concerns that the euphoria around AI related companies is fading.Shares in Korean chip makers SK Hynix and Samsung are down 46% and 35% respectively over the last month as investors worry the recent boom in demand for the chips that power AI is unsustainable.The South Korean stock market is notoriously volatile, but concerns have spilled over into the big US companies with Micron and Intel which have seen falls of 28% and 35% since last month."The AI bubble hasn't burst but it's letting out air," leading tech investor Eileen Burbidge told the BBC, as a number of factors in different parts of the AI ecosystem are darkening the mood.China BreakthroughOne of the triggers for the recent falls was a reported breakthrough in the chip manufacturing process by a Chinese company, potentially making China more self-sufficient in chip design and production.That has added to lingering concerns that the big AI companies – Meta, Alphabet, Open AI, Anthropic – will find it hard to charge end users enough to justify the hundreds of billions being spent on buying the chips and building the data centres that power the technology.While increased spending on AI has historically been welcomed by investors in the so called hyperscalers, dialling up the spending has recently not been met with the former enthusiasm.Meta shares are down 15% over the last month, while SpaceX – which is predominantly an AI company - has seen its shares fall 14% from its much-hyped IPO debut and nearly 50% from its peak in June.Meanwhile Apple – which has largely sat out the AI arms race – has seen its shares rise 21% over the last month to reclaim its title as the world's most valuable company from chip maker Nvidia.London's benchmark FTSE 100 index, which does not contain any major tech companies, al...