Chip stocks that notched record rallies in second quarter start Q3 with a dud
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- Micron, Intel, and AMD each tumbled on Wednesday (11%, 9%, and 7% respectively), erasing gains after the three combined to add $2 trillion in market value during Q2 as investors bet AI demand would extend beyond Nvidia's GPUs to memory and CPUs.
- VanEck Semiconductor ETF (SMH) dropped more than 5% on the first trading day of Q3, just one day after closing its best quarter ever with a 71% gain from the start of April through the end of June.
- Lam Research, KLA Corp., and Applied Materials — all of which more than doubled in Q2 — each fell at least 10% on the same day.
- Meta rose more than 9% on the same session after reports it may rent out excess AI computing capacity, with KeyBanc analysts calling the pivot a way to position the company "more into the enterprise side of the market."
- Richard Saperstein of Treasury Partners told CNBC's "Closing Bell" that he would "stick with the hyperscalers" despite the rotation, noting that "earnings are accelerating, yet multiples are compressing."
- Micron reported last week that revenue more than quadrupled in the latest quarter, with gross margins expanding to 84.9% from 39% a year earlier — suggesting the selloff had little to do with the chipmakers' latest financial results.
Why it matters: The same news day produced opposite outcomes for two layers of the AI trade: chip suppliers sold off on supply-glut fears while Meta rallied on a pivot toward monetizing its own excess compute — meaning investors now see hyperscalers with enterprise optionality as safer than commodity chip exposure heading into Q3, even as Micron's fundamentals (revenue quadrupling, margins hitting 84.9%) show no cracks.
