Semiconductor Index plunges 10.26% in worst day since 2020
In brief
- Philadelphia Semiconductor Index fell 10.26% on June 5, worst day since March 2020
- Broadcom earnings disappointment and rising Treasury yields sparked the selloff
- Marvell, Micron, and ARM fell 13-17% as valuations proved stretched
- Nasdaq Composite dropped 4.18%; S&P 500 fell 2.64%
The Unwind Begins
Disappointing quarterly results from Broadcom gave investors a reason to reassess. When the numbers missed expectations, it was enough to shake conviction in an entire sector that had priced in unlimited chip demand. Rising Treasury yields poured gasoline on the fire, compounding the damage.
Higher yields make future earnings less valuable in present-dollar terms, which hits growth stocks particularly hard. Semiconductors—already expensive on historical valuation metrics—bore the brunt. The broader market also stumbled: the Nasdaq Composite fell 4.18% while the S&P 500 dropped 2.64%.
Individual Casualties
The damage spread across the sector. Marvell Technology led the bleeding, plunging 16.74%. Micron wasn't far behind at 13.25%. ARM Holdings dropped 12.84%, Intel shed 11.28%, and AMD fell 10.86%.
A 70% year-to-date gain in an entire sector index isn't normal. It's the kind of run that happens when a transformative technology narrative, in this case generative AI, convinces the market that demand for chips will be functionally infinite.
What Shifted
Valuations coming into this sell-off were stretched by virtually any historical metric. The sector had priced perfection. A miss from one of the largest players, combined with the headwind of higher rates, was enough to trigger a repricing. Investors who had bet on an AI-driven infinite-demand thesis suddenly faced a different calculus: if future earnings are worth less in today's dollars, the premium multiples don't hold.
