Broadcom’s disappointing outlook and interest-rate concerns triggered one of the sector’s sharpest selloffs in years.
A sharp selloff in semiconductor stocks erased roughly $1.3 trillion in market value on Friday, as investor concerns over AI-related growth expectations and broader market pressures triggered one of the sector’s worst trading sessions in years.
The PHLX Semiconductor Index dropped more than 10%, marking its steepest single-day decline since the market turmoil of March 2020. The fall extended losses from the previous session, following Broadcom’s latest earnings report, which disappointed investors who had expected stronger momentum from its custom AI chip business.
Several of the biggest names in the AI semiconductor industry were hit hard. Nvidia, the world’s most valuable chipmaker, declined about 6%, wiping out more than $300 billion in market capitalization. Memory chip manufacturer Micron Technology plunged 13%, while Marvell Technology sank 17%. Advanced Micro Devices (AMD) also suffered heavy losses, falling nearly 11%.
Broadcom shares dropped almost 8% on Friday, taking the company’s two-day decline close to 20%. The weakness in Broadcom’s outlook raised concerns that investor expectations for AI-related semiconductor demand may have become overly optimistic.
Market sentiment was further pressured by stronger-than-expected U.S. employment data, which increased concerns that interest rates could remain elevated for longer. The broader S&P 500 index also retreated as investors reassessed valuations across high-growth technology stocks.
Despite the sharp correction, semiconductor stocks remain significantly higher for the year after months of gains fueled by enthusiasm around artificial intelligence infrastructure and data-center investments.
Analysts noted that the sector had experienced an extended rally and that profit-taking was not entirely unexpected. While the selloff reflects growing caution among investors, many market observers believe it does not necessarily signal the end of the long-term growth story for AI-driven semiconductor companies.
