US AI chip stocks plunge, wiping out over $1.3 trillion in market value in a single day

Semiconductor stocks that have led the AI boom on Wall Street tumbled in unison Thursday, erasing more than $1.31 trillion in market capitalization in a single session.

The Philadelphia Semiconductor Index, which tracks 30 major chip stocks listed in the United States, fell 10.3% that day — its steepest single-day drop since March 2020, when global financial markets were battered by the COVID-19 pandemic, according to Reuters.

Industry observers attributed the broad selloff to a combination of factors: growing market skepticism that Broadcom's AI chip business is falling short of investor expectations, and renewed fears of an interest rate hike after a surprisingly strong US jobs report.

Nvidia, the dominant player in the AI semiconductor market, shed roughly 6%, with its market capitalization declining by more than $300 billion. Micron plunged 13%, wiping out approximately $150 billion in market value.

Marvell Technology, which had been among the recent market leaders, fell 17%, while AMD dropped 11%.

Broadcom also fell nearly 8%, bringing its two-day decline to around 20%.

Reuters analyzed the selloff as emerging amid growing investor wariness toward richly valued technology stocks ahead of a massive initial public offering by Elon Musk's space company SpaceX.

Should SpaceX complete a successful listing, its valuation is expected to reach $1.75 trillion (about 2,728 trillion won).

May's unexpectedly resilient US employment data has also strengthened expectations that the Federal Reserve could raise interest rates before the end of the year.

The Bureau of Labor Statistics reported that nonfarm payrolls rose by 172,000 in May, far exceeding the 80,000 gain forecast by analysts surveyed by Dow Jones.

Some observers, however, viewed the decline as a correction from overheating rather than a sign of deteriorating industry fundamentals. The Philadelphia Semiconductor Index had surged sharply in recent months, and despite Thursday's selloff, it remains up 73% from the start of the year.