Chip stocks are getting hammered as concern about circular financing, international competition and the staying power of the investment cycle bear down on the artificial intelligence trade. The Philadelphia semiconductor index ( SOX ) is down more than 22% percent this month through midday, the sixth worst month ever. Despite the plunge, it's far from certain that the latest downturn is the beginning of the end for the AI super-cycle. Take the example of the 1990s. Before its March 2000 peak at the height of the dot-com bubble, the SOX saw several months of savage percentage declines comparable to this month, showing how hard it is to call a top in an investment boom that overshadows a usual business cycle. Only later, after the dot-com bubble burst in early 2000, did the semiconductor index go on to lose nearly 80% over the next two-and-a-half years. Uptrend speed bump Dan Niles, portfolio manager at Niles Investment Management, on Monday described the current decline in chip stocks as a "speed bump" in an uptrend, albeit one that may feel devastating. "These speed bumps can get to be really vicious. You go back to 1995 [and] semis were down over 50% … You had another drawdown of about 50% starting in late 1997. The semi index finished up 850% from the end of 1994 to its peak, so the speed bumps look like the end of the world until they're not," Niles told CNBC. Now the AI trade is being tested again this week by another massive circular financing deal between chipmaker Nvidia and AI platform and researcher OpenAI. Under the $250 billion agreement, Nvidia would act as a co-signer for debt raised by OpenAI to lease space in a new $500 billion data center in southern Ohio under construction by a Softbank energy subsidiary. The deal was first reported Sunday by the Wall Street Journal . A similar credit-wrapping structure has been used by Alphabet to provide guarantees for data centers used by software maker Anthropic, which will buy Alphabet's own specialized AI hardware, known as tensor processing units. But some analysts saw the Monday slide in semiconductor stocks following the news of the backstopping deal as evidence that the current downturn still has room to run. "That sort of trade in the face of a well publicized 'backstop' suggests we still have a ways to go in this AI correction," Jonathan Krinsky at BTIG wrote to clients Monday. He predicts a test of the 200-day moving average for the SOXX, an ETF from iShares that's based on the semiconductor index. Competition with China is also suddenly dogging the AI trade too. Shanghai Aishengna Electronic Technology Group has begun manufacturing deep-ultraviolet photolithography machines that are crucial to cutting-edge chipmaking, The Information reported Monday . The news took a bite out of Dutch semiconductor equipment maker ASML . The advance followed the launch of Moonshot AI's Kimi K3, a piece of open-weight AI software that rivals products from Anthropic and OpenAI at a lower cost. Cost concerns have led several companies to pull back on their AI use recently while combining different pieces of software to maximize efficiency, in order rely less on a single model or workflow. AI debt But the biggest concern of all may be the glut of AI-related debt. "As capex swamps free cash flow, [and] capital markets exhibit a diminished appetite for AI paper … Many are wondering how the boom can continue at the present pace for an extended period," Adam Crisafulli wrote in the Vital Knowledge newsletter on Tuesday. Traders at UBS responded similarly, connecting dots between debt, capital investment and return on invested capital. "While the AI debt boom is still very much alive, it has started to show some signs of fatigue, as recent [investment grade] tech supply has faced weaker demand and underperformed in secondary" markets, traders at the bank wrote in a note Tuesday.