The artificial intelligence boom hit a rough patch this week as a selloff in chip stocks sent global markets sliding, while in the US an opaque White House office quietly rebuilt sensitive federal websites with visitor-tracking software, prompting critics to warn of violations of federal law.
The downturn began on 22 June when Alphabet suffered its worst day on the market in over a year after a string of high-profile leaders announced departures from Deepmind, Google’s elite AI research unit. A day later, shares of South Korean chipmakers Samsung and SK Hynix dropped by double digits, stoking fears about their $500bn spending plans and signs of weakening demand for high-bandwidth memory products. The two companies make up half of the value of South Korea’s Kospi index, and their precipitous falls triggered a halt on trading.
“AI shares slump while US government websites redesigned with tracking software spark surveillance fears.”
Despite the jitters, Blake Montgomery, US tech editor at the Guardian, said he did not believe this was the beginning of the end for AI. “The share price of some chip companies has tripled, or more, since January, driving entire stock markets sharply higher in Asia,” he wrote, noting that the Kospi index is up 125% this year, its strongest first half since at least the 1990s. The selloff, he argued, would need to become far more severe to pop the ballooning global investment in AI.
Separately, a Guardian investigation has found that the National Design Studio (NDS) – established by a Donald Trump executive order last August and led by Trump-aligned Airbnb co-founder Joe Gebbia – has apparently redeveloped or built four public federal websites without complying with privacy laws. The NDS, staffed largely by veterans of Elon Musk’s “department of government efficiency” (Doge), created sites for prescription drugs (trumprx.gov), children’s savings (trumpaccounts.gov), food (realfood.gov) and its own portal (ndstudio.gov). All four ran commercial visitor-tracking software called PostHog, configured to evade the privacy tools many web users install, and none carried the public filings required under the Privacy Act of 1974 and the E-Government Act of 2002.
The NDS also built White House-controlled versions of a passport-application portal that bypasses the state department’s existing site, and a copy of voter-registration site vote.gov. None of the office’s spending or its arrangements with outside vendors appears in the federal contracting database USAspending, raising questions about how it is funded and overseen. Critics said the redesign appears to violate federal law and erode trust in government services, as sensitive interactions with the state are routed through infrastructure the White House apparently controls outside normal accountability systems.
Whether the AI slump will deepen or the NDS’s practices will face legal challenges remains to be seen, but the week has underscored the fragility and opacity of the technologies shaping both markets and governance.