Chip stocks plunge, but bargain-hunters stem losses in other tech names
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- Philadelphia SE Semiconductor Index dropped 7.5% as chip stocks fell from record highs, with Micron plunging 10.8% ahead of its Wednesday earnings report.
- Nasdaq Composite fell 1.7%, wiping out approximately $776 billion in market value, while Nvidia's market cap slipped below $5 trillion on a 3.4% decline.
- SpaceX briefly dipped below its $2 trillion market cap debut level before rebounding into positive territory, having erased more than $600 billion in market cap since last Wednesday.
- Memory chipmakers led losses, with SanDisk down 12.4% and Western Digital off 8.4%, despite the group having been the S&P 500's best-performing stocks this year.
- Baird's Ross Mayfield said the AI trade is "highly concentrated and flow-driven," making it "vulnerable to relatively small shifts in sentiment" rather than tied to AI fundamentals.
- Mattioli Woods' Lauren Hyslop attributed the selloff to a more challenging interest-rate backdrop and concerns about the scale of capital required to fund the next phase of AI investment.
- Fed Chair Kevin Warsh's expected tighter monetary policy has hurt rate-sensitive tech names, compounding the unwind from months of heavy inflows into global tech.
Why it matters: The selloff shows how narrowly the AI rally was built — concentrated chip and infrastructure bets unwound on a sentiment shift, not a fundamental trigger. With Micron reporting earnings next and the Fed signaling tighter policy, investors get their first real test of whether mega-cap AI spending justifies valuations that briefly carried Nvidia past $5 trillion.
