Philadelphia Semiconductor Index plunges 5% as global tech rout deepens

The Philadelphia Semiconductor Index tumbled 5% on Thursday, extending a global rout that has erased more than $600 billion from technology stocks this week as investors fled AI-driven names on valuation and demand concerns.

"Investors are just a bit skittish after very strong moves in tech stocks where any hint of caution causes some investors to hit the sell button," Dan Ives, head of technology research at Wedbush Securities, said. "It's a gut-check moment."

The SOX decline accelerated through the session, with Micron Technology falling 6.6% ahead of its earnings report — a reversal from the 15% surge the stock posted Wednesday after blowing past estimates. Nvidia slid 1.7%, Advanced Micro Devices dropped 4.6% and Intel lost 4.6%. TSMC, the world's largest contract chipmaker, fell 3.2%, while ASML Holding declined 3.9% and Broadcom shed 3.2%. ARM Holdings dropped 4.7%.

The selloff marks the sharpest pullback for semiconductor stocks since the AI-driven rally began in 2023, raising questions about whether the sector's valuation has run ahead of fundamentals. The SOX had more than doubled over the past 12 months as companies poured billions into AI data center infrastructure. With the Federal Reserve's preferred inflation gauge rising to 4.1% and the central bank signaling a willingness to raise rates, the cost of capital for those investments is climbing.

The rout extended across global markets. South Korea's Kospi index closed 10% lower, dragged down by SK Hynix and Samsung Electronics, both of which fell more than 12%. Europe's Stoxx 600 Technology index shed 3.2%, with STMicroelectronics and ASMI each dropping more than 7%. Nasdaq 100 futures pointed to a 2.7% decline at the New York open, while the iShares Semiconductor ETF was down 5.9% in pre-market trading.

Apple shares slid 6% on Thursday after the company raised prices on MacBooks and iPads, citing rising memory costs — a sign that the chip shortage is squeezing downstream customers. The price hikes, which added $100 to $300 across Apple's product lineup, came days after Chief Executive Officer Tim Cook told the Wall Street Journal that "unsustainable" memory costs could make increases "unavoidable."

The selloff has been concentrated in the stocks that powered the AI boom. Nvidia, which briefly became the world's most valuable company earlier this year, has fallen more than 15% from its peak. The broader Nasdaq Composite has retreated for four consecutive sessions, its longest losing streak since October.

Micron, which reports fiscal third-quarter results Wednesday, is seen as a bellwether for AI-driven memory demand. The stock has surged more than 270% in 2026 through Wednesday's close, making it one of the best performers in the S&P 500. Analysts at Wedbush and Citi raised their price targets to $1,400 following the company's preliminary results, but the broader market's risk-off mood has overwhelmed even positive catalysts.

"Any indication of a slowdown in demand for AI is seen as a potential turn in the cycle," said Gil Luria, head of technology research at D.A. Davidson. "While the overwhelming sense is that demand is still far exceeding supply, investors are waiting for Micron to indicate that is still the case."

For investors, the question is whether this is a correction within a secular bull market or the beginning of a deeper unwind. The SOX trades at roughly 25 times forward earnings, down from 30 times at its peak but still above its five-year average of 18 times. If AI spending growth slows — or if rising interest rates make future cash flows less valuable — semiconductor stocks could face further compression.

This article is for informational purposes only and does not constitute investment advice.