US chip stocks stumbled on Tuesday, leading to a broader tech sell-off, but bargain-hunting investors helped stem losses in other tech companies. The tech-heavy Nasdaq Composite index was down 1.4%, wiping out approximately $680 billion in market value in morning trading. This marks the first major sell-off in weeks for the tech sector, with the Nasdaq nearly 5% off its early June peak.
Chipmakers, key beneficiaries of the AI trend, faced heavy losses. The Philadelphia SE Semiconductor Index declined by 6.3%. Micron, which had seen significant gains, was down 9% ahead of its earnings report. Other memory chipmakers also lagged, with SanDisk falling 12% and Western Digital losing 11%. South Korean memory chipmakers, including Samsung and SK Hynix, both fell over 12%, contributing to a 10% plunge in the Kospi index.
SpaceX, which had a recent record-breaking IPO, saw its market capitalization briefly fall below $2 trillion before rebounding. Its shares were up 1.7% at $157 after trading as low as $147.11, below its opening-day price of $150. Other tech giants had mixed performance, with Alphabet down 0.4%, Apple up 0.8%, and Microsoft up more than 2%. Software stocks like Workday and Salesforce also saw gains, recovering from earlier AI-linked fears.
The sell-off was attributed to investor concerns over the high valuations of AI-related companies and the expectation of tighter monetary policy under US Federal Reserve Chair Kevin Warsh, especially as recent economic data indicates a resilient economy. Despite the recent declines, the Nasdaq is still up 10% this year, and global tech stocks have seen significant gains, with some Asian benchmarks soaring at least 40%.
