‘Recalibration of expectations’: Chip stocks lose $1 trln in value amid rout

Chip and processor makers in the Philadelphia Semiconductor Index have lost close to $1 trillion in combined market value over the last six trading sessions, and the losses could exceed that mark, Bloomberg reports. Investors are increasingly concerned about rising interest rates, stretched stock valuations, and the enormous cost of building AI infrastructure.

The Philadelphia Semiconductor Index fell as much as 4.5% in trading on Wednesday. It has lost around 10% over the last six trading sessions and is heading for its longest losing streak since May 2025, Bloomberg noted. More than half of its constituent stocks have fallen at least 10% over that period. For example, Arm Holdings has tumbled almost 20%, Applied Materials is down around 15%, and Intel has shed 11%. GlobalFoundries is the only index constituent still in the black over that stretch, according to Bloomberg. The Roundhill Memory ETF, which provides exposure to memory-chip makers including Micron, Sandisk, SK hynix, and Samsung Electronics, also fell 5% on Wednesday.

The global AI trade, led largely by semiconductor stocks, has come under heavy pressure over the last week, Bloomberg writes. "Pressure has ratcheted up on global chip stocks in recent days,” Ulrike Hoffmann-Burchardi, chief investment officer for the Americas and global head of equities at UBS Global Wealth Management, was quoted as saying by Bloomberg. “While increased competition within AI, rising financing requirements, and higher rates may periodically add to volatility, we view this latest bout as more of a recalibration of expectations than a fundamental break in the AI investment story.”

Adding to the pressure were comments from Broadcom CEO Hock Tan, who on Monday likened some investors trying to cash in on the AI boom to casino gamblers and warned that the sector could face funding constraints. Hotter-than-expected September U.S. inflation data triggered another wave of selling on Wednesday, reinforcing expectations for further Fed interest-rate hikes.

An invitation-only investor presentation by AI start-up Anthropic, scheduled for Wednesday in San Francisco, will be a key event for the market, Bloomberg writes. Wall Street will look for indications of the company’s current annualized revenue run rate to better gauge the market’s willingness to keep increasing AI spending.

“We suggest investors focus on where AI spending is translating into sustainable earnings growth and broader enterprise and consumer adoption,” Hoffmann-Burchardi said.