Chip Rout Pushes Nasdaq-100 Into Correction
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- Nasdaq-100 entered correction territory on Tuesday with a drop of more than 10% from its recent high, ending the day down 1%, while the Philadelphia Semiconductor Index sank into bear market territory (20%+ drop).
- Chip stocks plunged globally: Sandisk fell 14%, AMD, ARM Holdings, Micron and Seagate dropped more than 8%, Dell tumbled 8.1%, and Intel slid 5.8%.
- Samsung Electronics and SK Hynix plunged more than 15% in Asian trading, with Kioxia down 18%, pushing South Korea's Kospi more than 30% below its recent high in just 25 trading days after a 300% rally that ended in late June.
- Apple briefly surpassed $5 trillion in market value for the first time — only the second company ever to do so — overtaking Nvidia ($4.77T) as the world's largest public company while ending the day at $4.95 trillion.
- JPMorgan projected AI-related corporate spending will approach $870 billion by year-end 2026, up 77% year-over-year, with hyperscalers representing about $750 billion of that total.
- Alphabet raised its projected capital expenditures to as much as $205 billion last week after reporting earnings, a move Evercore's Mark Mahaney said increases the odds of similar increases from AWS and Azure when they report this week.
- The selling followed a Monday report that a Chinese state-backed firm was beginning mass production of domestic chipmaking tools — a claim NBC News could not verify — pulling shares of equipment makers ASML, Canon, and Nikon sharply lower.
Why it matters: The sell-off revealed a split market: chip and AI-infrastructure names cratered while the S&P 500, Russell 2000, and Dow all closed higher, and Apple's $5T crossover — achieved without massive AI data-center capex — signals investors are rotating toward diversified mega-caps over crowded chip bets. With Meta, Amazon, and Microsoft reporting this week, their capital expenditure guidance will determine whether the chip rout deepens or the AI spending thesis reasserts itself.
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