Broadcom, Micron, AMD, and Other AI Chip Stocks Slumped on Friday. You Can Thank OpenAI and SpaceX.

The past few years have been lucrative for semiconductor investors. This has been especially true for chip stocks serving the artificial intelligence (AI) boom. The PHLX Semiconductor Index -- which lists the 30 largest U.S.-listed chipmakers -- has soared 429% (as of this writing) since the adoption of AI began in earnest in early 2023.

At the same time, those same stocks have been fraught with volatility, as the PHLX has fallen at least 10% on seven separate occasions, which explains why semiconductor investing isn't for the faint of heart.

Case in point: Broadcom (NASDAQ:AVGO) dropped more than 3% in early trading on Friday, Advanced Micro Devices (NASDAQ:AMD) fell more than 5%, Micron Technology (NASDAQ:MU) tumbled more than 7%, and Sandisk (NASDAQ:SNDK) sank nearly 10% -- though each of these stocks has since rebounded slightly. This broad cross-section of AI chip stocks traded lower today on a report that one of the biggest names in AI may delay its initial public offering (IPO).

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When OpenAI sneezes, AI stocks catch a cold

OpenAI is planning to delay its public debut until sometime next year, according to a report that first appeared in the New York Times, which cited "three people involved in the company's deliberations." The AI start-up is part of the rising tide of expected IPOs this year, kicked off by the blockbuster debut of Space Exploration Technologies Corp., or SpaceX, earlier this month. OpenAI and rival Anthropic were also expected to make their public debuts soon.

OpenAI had sought to capitalize on the momentum of SpaceX's record-setting IPO. The company had hoped to achieve a valuation above $1 trillion, up from $730 billion in its most recent private funding round.

Unfortunately, recent events have forced OpenAI to rethink its plans. Chief among those was the volatility that followed SpaceX's high-profile debut. The stock ended its first day of trading up 19% before soaring as much as 50% in the days that followed. Those gains were short-lived, however, and the stock is currently down 22% from its peak, shedding $600 billion in market cap in the process. Add to that concerns about the overall pace of AI adoption and general market volatility, and OpenAI is apparently rethinking its plans.

Let the chips fall where they may

So what does this all have to do with AI chip stocks? OpenAI has been a voracious consumer of AI chips and has previously boasted of $1.4 trillion in data center commitments through 2030. An IPO -- particularly one of this magnitude -- would find the company flush with cash, much of which would undoubtedly be spent on AI infrastructure to support its popular ChatGPT models and ongoing large language model (LLM) development. If OpenAI were to delay its IPO, it would also be postponing the potential influx of cash to support its operations and possibly hamper its future development.

This, in turn, would have direct implications for chipmakers. AMD supplies graphics processing units (GPUs) that power AI processing in data centers. Broadcom, on the other hand, supplies application-specific integrated circuits (ASICs) that have become all the rage because they are more energy-efficient for specific, repetitive computing tasks than GPUs. For their part, Micron and Sandisk supply computer memory and storage -- including DRAM, NAND, and HBM chips -- that are critical components for GPUs and ASICS, and are foundational for AI processing.

On the bright side, stock price moves like these are generally short-term in nature, driven by the whims of fair-weather investors. Looking ahead, global AI infrastructure spending is expected to reach more than $1 trillion annually by 2030, so demand for these chips is likely to remain high for years to come.

This gives savvy investors the opportunity to buy these AI chip stocks at a discount when investor sentiment temporarily turns.

Danny Vena, CPA has positions in Broadcom. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Micron Technology, and The New York Times Co. The Motley Fool has a disclosure policy.