Wall Street’s Hottest Trade Cracks as Chip Stocks Lose Over $1 Trillion in Rout

Chip stocks plunged to end last week, turning a rough session into a broad rout as the semiconductor sector suffered its worst drop since April 2025, Jared Blikre reported for Yahoo Finance.

The AI trade faces a major correction. (Photo: Intel Corporation)

The sell-off erased over $1 trillion in market value, as enthusiasm around the artificial intelligence (AI) trade sharply unwound, according to market reporting.

A Yahoo Finance analysis of semiconductor equities showed the group losing approximately $1.4 trillion in total market capitalization, with the 10 largest decliners accounting for roughly $1.1 trillion of the decline.

Nvidia, Taiwan Semiconductor Manufacturing Company (TSMC), Broadcom, and Micron were among the hardest hit, with Nvidia alone reportedly shedding around $330 billion in value.

The Philadelphia Semiconductor Index fell about 10.3%, marking its worst performance since the aftermath of the April 2025 market shock.

The broader technology sector also weakened, with major ETFs tracking semiconductors and tech stocks posting steep losses.

The S&P 500 declined 2.6%, snapping a nine-week winning streak, while the Nasdaq 100 dropped nearly 4.8%, reflecting concentrated losses in large-cap technology stocks.

Despite the sharp index-level decline, market internals were mixed, with slightly more advancing than declining stocks in the broader S&P 500. However, tech-heavy indices showed far weaker breadth, underscoring how concentrated the sell-off was in semiconductor and AI-linked names.