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The AI infrastructure trade has been stalling for five weeks now, since peaking on June 2. What began as a single catalyst in late May has since snowballed into eight distinct reasons behind the current consolidation, dragging the Nasdaq down 4%, the Semiconductor Index down 11%, and Korea's Kospi down a sharper 18%.
The damage isn't evenly spread. Breaking the AI trade into its five core layers, plus a Layer 0 for materials, shows a clear pattern: Layer 0 (materials) has seen many names decline 15-20%; Layer 1 (energy) has seen declines of 10-20%; Layer 2 (chips) has seen similar 10-20% pullbacks; and Layer 3 (infrastructure) has been hit hardest, with many stocks down 20-25%.
So what's actually driving this sell-off? Here are the eight reasons.
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