Major chip stocks such as Sandisk, SK Hynix, Intel, Micron and AMD slid significantly, falling up to 10% during the trading session on thursday, August 6 as investors remain uncertain over the semiconductor and artificial intelligence space.
The decline in these stocks was led by Sandisk, falling as much as 9.93% to $1,216.4, followed by SK Hynix shares, dropping 6.26% to $141.58, Micron stock fell 4.39% to $ 854, Intel slipped 3.67% to $97.36 , while AMD shares traded 2.93% down at $479.12.
Notably, Sandisk shares crashed during the pre-market session after the memory maker's revenue forecast for the first quarter missed estimates despite delivering strong quarterly results. The computer hardware company sees first quarter revenue in the range of $10.3 billion to 10.8 billion, below Bloomberg consensus estimate of $11.16 billion.
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Why Are Chip Stocks Falling?
The drop in shares come amid volatilty in the sector with cycles of profit-taking and massive sell-offs, as concerns grow over heavy artificial intelligence spending by big tech companies, and pressures from new domestic chip production and memory IPOs in China, according to reports. Market expert believes that the recent volatilty indicates how investors have revised their expectations around AI.
According to Harshal Dasani, Business Head at INVasset PMS, "The opening weakness in chip stocks looks more like an expectations reset than a breakdown in AI demand. SanDisk and Western Digital delivered strong quarters, but valuations had already priced in sustained acceleration in memory prices, margins and data-centre demand. In that setup, merely beating estimates is no longer enough. AMD faces a similar challenge. Its revenue outlook remains supportive, but stable gross-margin guidance and the execution gap versus Nvidia leave little room for disappointment.
He added, "Memory remains cyclical, and earnings expectations can reverse quickly when pricing momentum slows. The structural case for semiconductors remains credible because data-centre demand is still firm, but the market is no longer rewarding participation alone. It is demanding execution."
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