AI Chip Selloff Sinks Nasdaq 1.2%
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- AI chipmakers broadly sold off on Friday, July 17, 2026, pulling the Nasdaq down 1.2%, the S&P 500 down nearly 0.9%, and the Dow down 0.6%
- Taiwan Semiconductor Manufacturing Co. (TSMC) dropped more than 3% after Thursday's earnings beat expectations for profit and revenue but came paired with capital expenditure plans above prior forecasts
- Nvidia, the world's largest company by market capitalization, slipped 1.4%, while Intel fell 0.8%, Applied Materials tumbled 4.6%, Corning dropped 1.8%, and AMD — with an ~$800 billion market cap — slid more than 1%
- Micron Technology climbed 3.5% and Sandisk jumped nearly 2%, escaping the broader decline
- The SMH ETF, which tracks the 25 largest U.S. semiconductor firms, has fallen 9.5% over the past month, though Micron is still up 209% and Sandisk up a staggering 506% year-to-date, with Nvidia up 10%
- Analysts told ABC News the slide owes primarily to profit-taking after a prolonged run-up, with secondary pressure from concerns over the sustainability of massive AI infrastructure spending and a 52% market-implied probability of a September interest rate hike per CME's FedWatch tool
Why it matters: Even TSMC's earnings beat couldn't offset its elevated capex guidance, signaling Wall Street's tolerance for AI spending is thinning — and with FedWatch pricing a 52% September rate-hike odds, the borrowing costs funding the AI buildout may rise just as investors demand faster, near-term returns on that outlay.
