The stock market is dealing with a big new fear about AI computer chips and depreciation, which is just a fancy way of saying chips lose their value quickly. When companies buy expensive AI chips for their data centers, they need to count how much money they lose as the chips get older and slower. Right now, big tech companies like Google, Amazon, and Microsoft say their AI chips stay valuable for about 6 years. But many smart traders and analysts are saying this is not true. They think the chips might only last 2 or 3 years before they become too slow and outdated. If the chips wear out faster, the tech companies will have to spend way more money on new chips, which will hurt their profits.

Famous trader Michael Burry recently warned that companies will lose about $176 billion in value between 2026 and 2028 because of chip depreciation. Another smart trader named Peter Berezin pointed out that by the end of this decade, big tech companies might own $2.5 trillion worth of AI chips. If these chips lose 20% of their value every year, that would mean $500 billion in costs every single year. That is more money than these companies make in profit! This scary math has made many traders sell their AI stocks. The stock index for technology companies fell about 6% in a few weeks, and some parts fell even more.

Not all traders agree that this is a huge problem. Some analysts who work for big investment banks, like Stacy Rasgon from Bernstein, say that AI chips can happily run and make money for 6 years, just like the companies say. These traders think the worry is too much. But right now, the traders who are scared are the ones making the stock prices go down. They are selling first and asking questions later. This has made many people wonder if AI stocks got too expensive too fast.

Some good news came out this week for some companies. AMD, a company that makes computer chips, told traders they will make more money than they said before. The traders liked this news so much that AMD stock went up 9%. Nvidia, the biggest chip company, keeps beating what traders expect for earnings, which is impressive, but the stock is not going up much because traders already expected it. Applied Materials, a company that helps make chips, also got better news when traders raised their guess about how much money the company will make.

Even with all the worry, some traders are finding good deals. Morning Star, a big company that gives advice to traders, says Microsoft and Alphabet are good deals right now because their stock prices are lower than the companies might actually be worth. Some smaller companies are also getting attention as good buys. Adobe is seen as a surprising choice because many traders think AI will hurt Adobe, but some experts think Adobe's new AI tools called Firefly and Gen Studio are actually very good. Cognizant, a company that helps other companies use technology, is also a good choice because it can help other companies set up AI. These companies are like the workers building the roads during a big construction project, and they might make good money helping everyone else build AI.

The big question for traders right now is whether the chip depreciation worry is real or fake. If chips really do lose value much faster than companies think, then tech companies will make much less profit, and stock prices will fall a lot more. But if the companies are right and chips last 6 years, then the stock prices might go back up. For now, traders are being careful and waiting to see what happens. This shows how fast the stock market can change when traders start to worry about something new.