There has been a sell-off of AI-related stock in many stock markets today, but this paragraph highlights the whole illogicality of this market. It comes from an FT report this afternoon:
Memory giant Sandisk — which fell 11 per cent on Monday — plunged more than 13 per cent on Tuesday. The stock has lost more than 50 per cent of its value this month, but nevertheless remains more than four times higher since the start of 2026.
There is no logic to any of that.
And we are told markets should be relied upon and that they know the answers to all questions.
If there is one thing I know for sure, it is that they don't.
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Sandisk – was trading @ $2335 (wow) end June. Now $1092 (get em while they are cheap missus! – that’s a joke by the way). The P/E now is circa 20 and for 2027 5.6. However, this assumes monster sales into 2027 (2.5 times those of 2026) but given market wobblies I suspect these may not come along. I mention all this not to promote the shares (I have zero to do with them) but to show that maybe market exuberance is coming to an end. I suspect a slow fizzle on prices., Sept, Oct. Oddly all the “analysts” predict a price of 2217.
Thanks, Mike.
I remember the heady days in early 2000 when Vodafone stock stood at over £5 and constituted over 20% of the value of the FTSE causing real problems for tracker funds. The price had more or less halved a year later and hit £1.30 by mid 2002. Why? Market sentiment changed with the dot com implosion. Good job markets don’t make the same mistake twice or this AI thing could end in tears.
🙂
I have often wondered about how shares are priced. Mobile markets in 2000 mostly rested on voice & SMS traffic which was plateauing. Most of the standards for mobile data were in place (3G) but the phones were still in catch-up (Nokia had a clamshell sort-of computer). It was only when Apple rolled along with the iphone (mid/late-2000s) that things moved off, again partly driven by 4G. This was all clear in 2000, which begs the question – why did markets “think” that Vodaphone was worth £5/share based on voice & SMS traffic?.
Hype
There were a lot of network operating licences being awarded around the world at the time and companies like Vodafone were expanding into a lot of these markets, thus increasing their market presence. As often, the thought is that the markets will grow along with profits, regardless and then they didn’t grow…
Loss in semiconductor stocks is probably primarily due to the Chinese announcing they have developed their own UV lithography to compete with the Dutch AMS which is currently embargoed to China. Once they start manufacturing their own nM chips this could lead to China dominating the whole of the chip manufacturing industry.
Sorry AMSL not AMS.