Chip Stocks Experience Significant Decline
On Friday, the iShares Semiconductor ETF (NASDAQ: SOXX) plunged approximately 10% to around $540, marking one of its worst trading days in years. This drop coincided with a 4% decline in the Nasdaq Composite, the most severe drop since April 2025. Key semiconductor companies like Marvell Technology and Micron Technology fell by 17% and 13%, respectively, while Intel and Advanced Micro Devices saw declines of around 11%.
The sell-off was precipitated by Broadcom’s (NASDAQ: AVGO) strong fiscal second-quarter results reported after market closure on Wednesday. While Broadcom recorded a 48% year-over-year revenue increase, reaching about $22.2 billion, AI chip revenue surged 143% to $10.8 billion. However, the company’s less-than-exciting revenue guidance for AI chips—projecting about $16 billion for the current quarter—failed to meet market expectations, leading to a total share decline of around 20% over two days.
The decline was exacerbated by a robust May jobs report showing 172,000 jobs added, sparking concerns that the Federal Reserve might increase interest rates, which typically impacts high-growth stocks in the chip sector. The 10-year Treasury yield rose to 4.54%, elevating rate hike speculation, adding pressure to already-volatile semiconductor stocks.
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