finance
Chip Stocks Pull Back After Recent Record Rally as Inflation Data Spurs Rotation
Qualcomm shares plunged 13 percent, heading for the worst session since 2020, as broader semiconductor stocks retreated from records set during an AI-driven rally. The declines followed a hotter-than-expected consumer inflation reading and rising oil prices tied to the war in Iran.
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Chip stocks dropped on Tuesday as investors hit risk-off mode following a hotter-than-expected reading of a key consumer inflation measure. Qualcomm stock dropped 13 percent on Tuesday and was heading for its worst session since 2020. Intel stock dropped 8 percent on Tuesday while On Semiconductor stock declined more than 6 percent on Tuesday and Skyworks Solutions stock declined more than 6 percent on Tuesday.
The iShares Semiconductor ETF sank 5 percent on Tuesday. Micron Technology dropped 6 percent on Tuesday. Sandisk stock tumbled 8 percent on Tuesday even as Sandisk shares have climbed more than sixfold since the start of the year.
The war in Iran is lifting oil prices, adding to the risk-off sentiment that reversed recent gains across the sector. The recent rally broadened the AI trade beyond Nvidia. Skyrocketing demand for central processing units and graphics processing units that underpin large language models has boosted chip stocks to records.
Qualcomm is one of the biggest semiconductor companies making chipsets. Investors are betting that central processing unit and memory chip makers will benefit from the agentic wave of AI. Investors are betting that the transition from AI training to agents will boost demand for other AI components.
Memory chip makers are hiking prices amid an ongoing supply shortage. That dynamic had propelled names like Micron and Sandisk higher in recent months before Tuesday's broad pullback. com reported that the sell-off marked a pause in a rally that lifted the sector to successive highs.
Tuesday's moves stood in contrast to the momentum that had extended the AI trade well past its early concentration in Nvidia. The shift had drawn fresh capital into companies positioned for what investors see as the next phase of artificial intelligence adoption.
