The AI trade just lost $1.6 trillion in six days. Here's what rattled markets — and what it means for Canadians.

The market's favourite trade is wobbling. A key index of U.S. chip stocks has shed roughly $1.6 trillion in value over just six days, according to Finimize's daily brief, and the selloff deepened Thursday after America's September inflation report came in hotter than expected.

U.S. consumer prices rose in September at their fastest pace in five months — 3.7 per cent, with gasoline up 9.1 per cent in a single month, as Serious Pick reported this week. That has investors bracing for the possibility of more interest-rate hikes from the U.S. Federal Reserve, which is bad news for richly valued tech stocks whose prices rest on the promise of future profits. When safer government bonds pay more, the bet on tech's future looks relatively worse.

The pain has been global. Samsung and SK Hynix, South Korea's memory-chip giants, each tumbled more than 9 per cent on Thursday, dragging the Kospi index down about 8 per cent and triggering a 20-minute trading halt, Finimize reported.

The twist: the selloff is less about demand drying up than about how investors are financing the AI boom. ASML — the Dutch company that is the only producer of the machines that make the most advanced chips — said it won't be able to meet demand for at least two more years, and TSMC forecast strong sales for the final three months of the year, Finimize noted. Strategists at Deutsche Bank and RBC Capital Markets have separately pulled back their recommendations on the tech sector, Reuters reported.

Financing is the other fault line. Investors have grown nervous about the debt funding the AI buildout, with CoreWeave — the AI cloud company carrying roughly $50 billion in debt — at the centre of the storm. Its shares and bonds tumbled this week, though the stock bounced about 6 per cent on Friday after Nvidia CEO Jensen Huang publicly defended the company's finances, according to Stockhouse's market coverage, which also noted criticism of CoreWeave from Elon Musk. Many analysts say they don't see the problem investors have flagged, the outlet reported.

For Canadians, the tremors reached Toronto. RTTNews reported that technology stocks weighed on the S&P/TSX Composite in Friday morning trading, with BlackBerry sliding nearly 7 per cent and names including Shopify, Constellation Software and Celestica off between 3 and 5.2 per cent, even as energy shares stayed firm. That's the double-edged market Canadian savers are living with: the AI trade has powered portfolios for years, and a sustained repricing would reach RRSPs and pension funds with heavy tech exposure — just as the Bank of Canada weighs its own Oct. 28 rate decision against persistent energy-price inflation.

The test comes fast. Reuters' Lewis Krauskopf reported Friday that Wall Street's spotlight now turns to quarterly earnings, with Meta — one of the hyperscalers spending massively on AI data centres — kicking off the big-tech results, alongside chip firms Lam Research and Texas Instruments. Despite the swoon, the S&P 500 remained only about 1 per cent below its record high set earlier this month, with money rotating into the sectors that lagged while tech soared.