The market value of U.S.-traded chipmakers fell by roughly $1.3 trillion on Friday.
AI heavyweights like Nvidia, Micron Technology, and Advanced Micro Devices saw significant losses, while Broadcom’s weak report earlier this week sent shockwaves through Wall Street.
In its biggest one-day decline since March 2020, when the coronavirus outbreak sent world markets into a spiral, the PHLX semiconductor index down 10.3%.
Following Broadcom’s quarterly report, which revealed that demand for its bespoke AI chips business fell short of high expectations, Friday’s selloff added to Thursday’s losses.
The PHLX’s combined 12% decline over the course of two sessions indicates that investors are growing increasingly wary about expensive, high-flying tech firms at the same time as Elon Musk is getting ready to launch SpaceX at an extraordinarily high $1.75 trillion valuation next week.
Even after Friday’s losses, the chip index is still up 73% year to date after reaching a new high on Wednesday.
The most valuable chipmaker in the world, Nvidia, had a 6% decline that reduced its market capitalization by more than $300 billion.
Micron Technology lost over $150 billion in market value as a result of a 13% decline. AMD lost over 11%, but Marvell Technology, a recent investor favorite, returned 17%.
Dennis Dick, a proprietary trader with Triple D Trading, stated, “You’ve had a lot of people here that were just blindly buying the dip.”
“Blindly buying the dip had been winning you money, but that ended today.”
Following better-than-expected jobs news, investors were nevertheless alarmed by worries about rising interest rates, and the S&P 500 plummeted 2.6%.
Broadcom, one of the major winners in the AI battle, dropped 7.9%, making its two-day loss nearly 20%. The semiconductor industry was significantly overpriced. We are witnessing a sell-off because of this. Ohsung Kwon, Chief Equity Strategist at Wells Fargo, stated, “I don’t think the (semiconductor) bull market is coming to an end.”
