Semiconductor stocks that have led the artificial intelligence (AI) boom on the New York stock market plunged in unison Friday, wiping out about $1.3 trillion (about 2,026 trillion won) in market capitalization in a single day. It marked the largest one-day drop since March 2020, when global financial markets were rocked by the COVID-19 pandemic.
According to Reuters, the wave of selling erupted as disappointment over corporate earnings and macroeconomic anxiety converged at the same time. Broadcom served as the trigger. When demand for the custom AI chip business fell short of the market's high expectations in the quarterly earnings Broadcom released this week, wariness over an overheated tech sector spread all at once.
On top of that, as Elon Musk's space company SpaceX prepares for a mega initial public offering (IPO) valued at $1.75 trillion (about 2,728 trillion won), investor sentiment toward overvalued tech stocks across the board came under pressure.
To make matters worse, U.S. employment data came in unexpectedly strong, stoking concerns over hawkish moves by the Federal Reserve (Fed). Nonfarm payrolls for May, released by the Bureau of Labor Statistics of the U.S. Labor Department, rose by 172,000 from the previous month, more than double the experts' forecast of an 80,000 increase. As the U.S. labor market maintained such strong resilience, fears spread in the market that the Fed could move to raise interest rates within the year.
As these adverse factors combined, the Philadelphia Semiconductor Index, composed of 30 major U.S.-listed semiconductor stocks, plunged 10.3% in a single day.
By stock, Nvidia, the leading AI chip stock, fell about 6%, shedding more than $300 billion in market capitalization, while Micron plunged 13%, erasing about $150 billion in market value. Marvell Technology, which had led the recent rally, plummeted 17%, and AMD plunged 11%. Broadcom, which delivered the earnings disappointment, also fell nearly 8%, bringing its two-day decline to almost 20%.
Some voices interpret this plunge as a natural correction driven by short-term overheating rather than a deterioration in the industry. The analysis is that the current selling does not signal the end of the semiconductor bull market. In fact, despite this major plunge, the Philadelphia Semiconductor Index remains up 73% on a year-to-date basis.
