Chip stocks are crashing worldwide and a star AI hedge fund is blowing up, a bad sign that the whole AI boom may be turning into a bubble.

• A $20 billion hedge fund that bet big on AI chips just lost most of its money in July and is begging investors for fresh cash to survive.
• South Korea's market had its worst crash since 1997 because chip stocks like Samsung make up half of it, and small investors who bought on borrowed money are getting wiped out.
• China is the real threat: its chipmakers are surging, it cracked key chipmaking tools it used to buy from the West, and its cheaper AI models undercut the whole US spending strategy.
• Meta's stock dropped after it admitted it will burn billions more on AI data centers with little extra revenue to show for it.
• The US economy is now leaning heavily on this AI buildout, so if the bet fails, jobs and growth take a big hit.

Outlook: More chip stocks could keep falling, and whether the AI trade holds up now hinges on whether these companies bet on the right, profitable model.