Semiconductor shares retreated steeply on Tuesday, reversing recent momentum that had taken the chip group to fresh highs and extended the market's artificial intelligence trade beyond a narrow set of names.
Among large-cap chip stocks, Qualcomm plunged 13% and appeared headed for its worst session since 2020. Intel slid 9.2%, On Semiconductor fell 6.7% and Skyworks Solutions lost more than 6.2%. The iShares Semiconductor ETF, which tracks the sector, dropped 5.3%, while Broadcom declined 3.8%.
Memory and storage names registered notable losses as well: Micron Technology fell 7.6%, and Sandisk tumbled 9%. The article noted that Sandisk shares have gained in excess of 500% since the start of the year.
Market participants attributed the pullback to a consumer inflation reading that came in higher than anticipated. The report, coupled with geopolitical developments in the Middle East - specifically the war in Iran - contributed to a rise in oil prices, and investors moved to reduce risk exposure in response.
The sell-off erased some of the recent leadership the semiconductor sector had displayed, trimming positions that had previously benefited from enthusiasm around artificial intelligence-related demand. The move was broad-based, with both equipment and component names among those giving up gains.
While the immediate trigger cited was the inflation print and its interaction with rising energy costs tied to conflict in Iran, the market reaction was a straightforward reduction in risk appetite: cyclical, growth-oriented sectors such as semiconductors were among the hardest hit during the session.
Market context
- The sector had recently rallied and extended the AI trade beyond a few dominant names.
- Higher-than-expected consumer inflation and an uptick in oil prices related to the Iran war spurred the sell-off.
- Major chipmakers and a semiconductor ETF posted multi-percent declines, with some individual names down in the double digits.