Semiconductor stocks, previously favored by investors as a primary way to profit from the AI boom, are facing significant volatility. Market sentiment shifted as investors began questioning the sustainability of high capital expenditures by hyperscalers on AI infrastructure.
In June, the Nasdaq fell by more than 4% in one session, with Micron, Intel, Super Micro, and Sandisk each dropping over 11%. July saw the Philadelphia Semiconductor Index record its worst week in over a year, while the SOXX/IGV ratio collapsed by nearly 20%.
On September 14, industry leaders called for a slowdown in AI development due to safety concerns. Following this, Intel, Micron, and AMD shares fell between 5% and 8% in a single day. Rising interest rates have further pressured growth stocks with high valuations.
Despite the sell-offs, fundamentals remain strong, with companies like Micron reporting earnings growth through mid-2026. After a recovery in August, which was the best for the sector in over 20 years, the market continues to weigh a potential shift toward software.
