- Chip stocks plunged after a record Q2 rally as investors locked in profits
- SanDisk led losses, dropping up to 14.4% intraday and ending down 13.29%
- Other chipmakers like Micron, Intel, and AMD fell between 5.2% and 5.8%
Chip stocks came under heavy selling pressure on Thursday, with some of Wall Street's biggest AI winners tumbling as investors locked in gains after a record-breaking second quarter rally.
SanDisk led the losses, falling as much as 14.4% intraday to $1,743.03. As of 10:27 p.m. IST (2 July), the stock was down 13.29% at $1,762.22.
The selling extended across the semiconductor space. Micron Technology was down 5.81% at $972.28, Intel declined 5.61% to $119.90, while Advanced Micro Devices (AMD) fell 5.20% to $512.75. The VanEck Semiconductor ETF (SMH), which tracks major chipmakers, dropped 5.40% to $586.93.
The broad-based decline comes a day after the semiconductor ETF capped its strongest quarter on record, surging 71% between April and June as investors aggressively piled into AI-linked stocks.
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The three companies together had added nearly $2 trillion in market value during the second quarter as investors broadened their AI bets beyond Nvidia, expecting strong demand for memory chips and processors.
Selling pressure also spread to semiconductor equipment makers. Lam Research, KLA Corp. and Applied Materials, all of which more than doubled during the second quarter, fell at least 10%.
The decline followed reports that Meta Platforms may rent out excess AI computing capacity, fuelling concerns that the rapid build-out of AI infrastructure could eventually create oversupply.
The development prompted investors to reassess rich valuations across semiconductor stocks. In contrast, Meta shares climbed more than 9%, with investors viewing the move as a potential way for the company to monetise its massive AI infrastructure investments.
Analysts at KeyBanc Capital Markets said the strategy could help Meta expand into the enterprise AI market while generating quicker returns from its AI spending.
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Despite the sell-off, several market participants remain optimistic on AI-focused technology companies.
"We continue to favour hyperscalers because earnings growth remains strong, even as valuations have become more reasonable amid concerns over elevated capital expenditure," Richard Saperstein, chief investment officer at Treasury Partners, said.
Thursday's sharp reversal underscores the growing volatility in AI-related stocks, as investors increasingly demand evidence that record investments in AI infrastructure will translate into sustained earnings growth.
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