Chip Stocks Shed $1.3 Trillion in Broadcom Selloff
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- Broadcom issued a quarterly report showing custom AI-chip demand fell short of expectations, sending its own shares down 7.9% on Friday and roughly 20% over two sessions after Thursday's initial drop.
- Nvidia fell about 6%, erasing more than $300 billion in market capitalization, while Micron Technology tumbled 13% (losing ~$150 billion) and Marvell Technology gave back 17%; AMD lost nearly 11%.
- The PHLX chip index (.SOX) dropped 10.3% — its deepest one-day loss since March 2020 — and is now down 12% over two sessions, though it had hit a record high on Wednesday and remains up 73% year-to-date.
- Stronger-than-expected U.S. jobs data amplified the move by stoking fears of higher interest rates, dragging the S&P 500 down 2.6% on the day.
- The selloff landed just as SpaceX was preparing a blockbuster IPO at a $1.75 trillion valuation, a sign investors were growing uneasy about richly valued tech names.
- Proprietary trader Dennis Dick said investors had been "blindly buying the dip" and that strategy stopped working; Wells Fargo's Ohsung Kwon called the sector "way overbought" but said he did not view the selloff as the end of the semiconductor bull market.
Why it matters: A single earnings miss from one AI-chip bellwether erased $1.3 trillion in equity value in one day, exposing how concentrated and overbought the AI-driven chip trade had become. The 10.3% PHLX drop is the worst since the March 2020 pandemic shock, and individual casualties are staggering: Nvidia lost over $300 billion, Micron $150 billion, and Broadcom nearly a fifth of its value in two sessions — a reminder that the year's 73% sector gain can reverse sharply when narrative cracks.
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