The semiconductor sector suffered its worst day since March 2020. The PHLX Semiconductor Index (SOX) plunged 10.3% on June 5, erasing more than $1 trillion in market value in a single session.
Micron Technology shares dropped roughly 13-14%, while Marvell Technology fell as much as 17%. The selloff was triggered by Broadcom issuing a revenue outlook that missed expectations, citing weaker-than-anticipated demand for AI chips.
A robust US jobs report compounded the pressure, raising fears that the Federal Reserve will keep interest rates elevated. For high-growth tech stocks trading at lofty valuations, higher rates reduce the present value of future earnings. Investors rotated out of high-momentum semiconductor names and into less rate-sensitive sectors.
Micron's decline was particularly notable as the company had recently crossed the $1 trillion market cap threshold. Nvidia, AMD, Intel, and Broadcom also posted significant losses, confirming a sector-wide repricing.
This selloff followed months of explosive gains in AI-related chip stocks, which analysts had dubbed the 'Parabolic 7.' The gap between stock prices and near-term revenue reality had grown wide enough that even a modest disappointment triggered a massive unwind.
The $1 trillion evaporation in a single session is roughly equivalent to the entire GDP of the Netherlands.
Earnings guidance from Nvidia, the bellwether for AI chip demand, will be the next major data point for investors.