Semis Drop 11% as Moonshot AI Stokes Capex Doubts
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- Philadelphia SE Semiconductor Index (.SOX) fell 11% this week — its steepest weekly decline since March 2025 — and is down nearly 24% from its late-June record, on pace to confirm a bear market.
- China's Moonshot AI unveiled Kimi K3, a 2.8 trillion-parameter open-weight model it calls the world's largest, intensifying investor scrutiny of returns on massive US AI capex.
- Nvidia dropped 3.4%, AMD slid 4.9%, Applied Materials fell 6.5%, and SpaceX shed 4.5% after Starship's 13th flight test aborted at the last second, pushing the stock below its $135 IPO price earlier this week.
- SK Hynix briefly slipped below its offering price before reversing to trade 4% higher; South Korea's KOSPI confirmed a bear market last week and Japan's Nikkei tumbled into correction territory on Friday.
- A Bloomberg report said Alphabet's Google is months behind schedule on releasing its Gemini 3.5 Pro flagship model, adding fresh pressure on the AI cohort.
- Strong forecasts from TSMC and ASML did little to stem the slide; quarterly earnings from Alphabet, Tesla, and Intel are scheduled for next week.
Why it matters: The Philadelphia Semiconductor Index's 60% year-to-date climb had valuations priced for near-perfect demand, leaving them vulnerable to any whiff of doubt — and now a 2.8-trillion-parameter Chinese model plus Google's Gemini delay have forced a re-rating of US AI capex assumptions. The rotation has spread well beyond US chipmakers: SK Hynix and SpaceX both touched their offering-price thresholds this week, and Alphabet, Tesla, and Intel earnings next week are the next scheduled catalysts.
