Analysis: The bursting of the memory chip stock bubble in this round has not triggered a systemic impact. The S & P 500 fell only 1.6% from its historical high

On August 2, according to the Wall Street Journal, bubbles around specific industries and themes have frequently appeared in the U.S. market in recent years, but the bursting of these local bubbles usually fails to drag down the overall stock market. This round of memory chip bubble rapidly expanded and burst in about four months, accompanied by violent fluctuations and a hedge fund falling into crisis. However, the S & P 500 index is only 1.6% away from its all-time high. The equally weighted S & P 500 index hit a new high last week. The correction in AI-related stocks is currently almost completely offset by gains in other sectors. Over the past ten years, the U.S. market has experienced bubbles such as 3D printing, China concept stocks, low-volatility products, SPAC, clean energy, marijuana, space, crypto assets and AI concept stocks. Strategy fell 83% from its high, Trump Media shares fell 89%, and SK Hynix fell 55% before rebounding last Friday. Easy money, speculative demand and expectations for new technologies have jointly driven these bubbles, and margin debt and leveraged ETFs have further amplified fluctuations in recent years. These localized bubbles did not have a serious impact on the economy, mainly because most of them were not financed by large amounts of debt. After the bubble burst, the losses were mainly borne by investors, and the banking system was not significantly affected. Macrostrategist RussellNapier said the banking system is still healthy, so the market will always have more credit to create the next bubble. However, AI investment is pushing the market into more dangerous territory. Data center spending is expected to reach US$7 trillion in the next four years. If the productivity gains brought by AI are not enough to support investment of this magnitude, capital mismatches could severely damage the economy. As AI construction increasingly relies on debt financing, once broader AI investment finally proves to be a bubble, its rupture may impact the financial system, and the overall market will be difficult to stay out of it.