Chip Selloff Enters Seventh Day as Rate Fears Meet AI Spending Doubts
Semiconductor stocks fell for a seventh straight session on Wednesday, the longest losing streak since May 2025, as hotter-than-expected inflation data collided with growing doubts about artificial intelligence infrastructure spending.
The iShares Semiconductor ETF, known as SOXX, dropped 4.5 percent to close at $519.42. The Philadelphia Semiconductor Index tumbled 4.3 percent and has lost about 10 percent over six sessions. Bloomberg estimated the broader selloff could erase more than $1 trillion in chip market value.
Advanced Micro Devices led the decline among large caps, falling 5.7 percent in its worst single-day drop since August, according to Barron’s. Nvidia slipped 3.2 percent, Broadcom lost 3.1 percent and U.S.-listed shares of Taiwan Semiconductor fell 3.4 percent. Marvell Technology sank 8.7 percent and CoreWeave, the cloud provider, plunged 15 percent.
The immediate trigger was the September consumer price report, which came in hotter than forecast. Headline inflation rose 3.7 percent from a year earlier, pushing the odds of a Federal Reserve rate increase later this month from about 22 percent to 37 percent. Higher rates weigh especially hard on richly valued growth stocks.
But rates are only half the story. Investors are questioning whether the AI buildout can sustain its torrid pace. A selloff in CoreWeave’s corporate bonds rattled confidence in the financing behind data center expansion. On the supply side, a strong demand forecast from chip-equipment maker ASML raised the prospect of pricier chipmaking machines.
There is also a China dimension. Concerns about rising competition from Chinese memory chipmakers have pressured memory names, with SK hynix and Micron among Wednesday’s notable decliners.
For perspective, the damage so far looks more like a reset than a rupture. UBS described the decline as “more of a recalibration of expectations than a fundamental break in the AI investment story,” arguing that coming earnings reports matter more for chip sentiment than financing worries. SOXX remains up more than 70 percent this year even after the slide.
What happens next hinges on three things: spending forecasts from the big cloud providers due later this month, third-quarter results from chipmakers themselves, and the Fed’s October meeting. If cloud capital spending holds up, Barron’s noted, much of the fear could fade quickly. If it cracks, the selloff has room to run.
