Tech firms’ off-balance-sheet AI obligations total $3 trillion, sparking profit-taking in memory chip stocks amid rotation.
Shares of memory chip makers fell sharply Tuesday after a report revealed top tech firms hold $3 trillion in off-balance-sheet AI commitments. SanDisk (SNDK) dropped 9%, Micron (MU) 7%, and Western Digital (WDC) 5% in late-morning trading, driven by investor rotation rather than memory-specific negative news.
The commitments, mostly tied to AI infrastructure, are growing faster than traditional capital expenditures, which totaled $600 billion over the past year. The $3 trillion figure is triple the companies’ combined lease and long-term borrowing obligations, highlighting the scale of hidden AI spending.
The selloff follows a strong year-to-date rally, with SanDisk up 653% and Micron up 255%. Market sentiment was further pressured by the 30-year Treasury yield hitting a 19-year high, increasing the likelihood of continued profit-taking.