Chip Stocks Erase $1 Trillion in Historic Selloff

The Philadelphia Semiconductor Index, the SOX, cratered 10.26% on June 5, erasing over $1 trillion in market capitalization from chip stocks in a single session. It was the index's worst day since March 2020.

SOX had surged nearly 70% year-to-date, driven by artificial intelligence euphoria. Disappointing earnings from Broadcom punctured that narrative, giving investors a reason to sell. Rising Treasury yields added pressure.

Marvell Technology led the carnage, plunging 16.74%. Micron fell 13.25%, ARM Holdings dropped 12.84%, Intel shed 11.28%, and AMD declined 10.86%.

This selloff comes after a rally that many analysts called unsustainable. The last time SOX had a day this bad was March 2020, which preceded one of the greatest semiconductor rallies in history. However, the current environment is different: valuations were stretched, Treasury yields are elevated, and earnings are now separating AI winners from those trading on hope.