Power Integrations (POWI) shares dropped 10.6% during afternoon trading. This decline occurred alongside a broader sell-off in the semiconductor sector. The Philadelphia Semiconductor Index plunged more than 7%.
Investors worry that high demand for AI-driven chips is cooling. A Citi analyst intensified these fears by questioning the sustainability of massive AI infrastructure spending. The analyst noted a lack of clear returns on investment for large cloud providers.
Reports that Meta may sell surplus AI computing power further pressured the sector. This development suggests major tech companies may have over-invested in infrastructure. Such overcapacity could lead to fewer component orders for companies like Power Integrations.
The widespread sell-off reflects a significant shift in investor sentiment. This change triggered substantial profit-taking across the semiconductor industry.