The selloff erased more than $1 trillion in market value from chip stocks globally, with the Nasdaq Composite suffering its worst session in months as a rout triggered by Broadcom's weak outlook cascaded across three continents.
Back
Chip selloff erases $1 trillion as Nasdaq enters bloodbath territory
Chip stocks lost more than $1 trillion in market value Friday, dragging the Nasdaq into a broad selloff after Broadcom's weak outlook reignited AI demand concerns.
"Micron looks like it is going to see a climax move soon," said Andrew Rocco, a stock strategist at Zacks Investment Research. "Typically, climax moves show up in extreme technicals before they show up in weaker fundamentals."
The selloff swept across the sector. Nvidia fell 3 percent, extending its weekly decline, while Micron dropped close to 5 percent in after-hours trade Thursday and continued sliding during Friday's session. Intel and AMD also declined. In Asia, SK Hynix plunged 9.9 percent, Samsung Electronics lost 6.4 percent, and the Kospi 200 fell 6 percent. European chip stocks followed, with Infineon sliding 5 percent, ASML falling 3.2 percent, and STMicroelectronics dropping 3.25 percent.
The rout comes two weeks before Micron's June 24 earnings report, where the memory-chip maker — up 840 percent over the past year with a market value above $1 trillion — will need to justify a valuation that some analysts say has run ahead of fundamentals. The stock trades at 10 to 13 times forward earnings, a multiple that John Porter, chief investment officer at AGF Investments, called "almost a contrarian signal" given the cyclical nature of the memory industry.
The selloff was broad-based, with technology and semiconductor stocks leading the decline. The S&P 500 fell alongside the Nasdaq, while the Dow Jones Industrial Average — which closed at a fresh record Thursday — managed to hold near flat in premarket trading before succumbing to the broader pressure.
Treasuries offered little refuge. The 10-year yield edged down 0.4 basis point to 4.472 percent, while the 30-year yield held at 4.977 percent. The dollar weakened, with the DXY index falling 0.6 percent to 99.352.
The catalyst for the selloff traces to Broadcom's weak outlook, which spooked investors already on edge ahead of the U.S. nonfarm payrolls report. Economists expect the data to show 80,000 jobs added in May, with unemployment at 4.3 percent. "With the FOMC two weeks out, nothing here suggests a near-term rate change will be pulled back onto the table," said Phil Neuhart, head of market and economic research at First Citizens Bank.
The selloff extended beyond equities. Bitcoin fell to a four-month low of $61,117, Ether hit a one-year low of $1,627, and Solana reached a two-and-a-half-year low of $63.84. Gold futures slipped 0.3 percent to $4,492.70 an ounce. Oil prices edged lower, with Brent crude down 0.4 percent to $94.67 a barrel and WTI falling 0.7 percent to $92.41, though both benchmarks remained on track for weekly gains amid renewed Middle East tensions.
This article is for informational purposes only and does not constitute investment advice.
[1] Selloff in Chip Stocks Prompts Nasdaq Bloodbath[2] U.S. Tech Stock Futures Slide as Global Selloff Extends[3] Intel, AMD stocks slide again in aftermath of Broadcom's weak outlook[4] Micron stock surged 839% in a year, but analysts warn of cracks[5] Chip selloff erases over $1 trillion in stock market value
