Chip stocks that notched record rallies in second quarter start Q3 with a dud
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- Micron, Intel, and AMD opened Q3 with steep declines — Micron dropped 11% wiping out $138 billion in market cap, Intel fell 9%, AMD fell 7% — a day after the three closed a Q2 that added $2 trillion in combined value on bets that the AI buildout would need more memory and CPUs, not just Nvidia GPUs
- The VanEck Semiconductor ETF (SMH) fell more than 5% after closing its best quarter ever with a 71% gain from April through June; equipment makers Lam Research, KLA Corp, and Applied Materials, which all more than doubled in Q2, each fell at least 10% on Wednesday
- Meta reportedly considering renting out excess AI computing capacity raised fears that AI processing supply is catching up to demand; Meta shares gained over 9% on Wednesday after a lackluster Q2
- KeyBanc Capital Markets analysts, who recommend buying Meta, wrote that the pivot positions it "more into the enterprise side of the market, which could provide more immediate" return on investment
- Richard Saperstein, CIO of Treasury Partners, said on CNBC's "Closing Bell" he'd "stick with the hyperscalers," noting "earnings are accelerating, yet multiples are compressing" as hyperscalers shift from being viewed as capital-intensive to asset-light
- Micron's latest quarterly results showed revenue more than quadrupling with gross margin jumping to 84.9% from 39% a year earlier, evidence the selloff isn't being driven by chip-company fundamentals
Why it matters: One report that Meta might rent out spare AI compute triggered a chip selloff that wiped roughly $138 billion from Micron alone and pulled down every major semiconductor stock. The reversal suggests investors are suddenly questioning whether the AI infrastructure buildout still needs more chips or whether supply is catching demand — a recalibration that erased large chunks of the sector's record $2 trillion Q2 gain in a single session.
