Wall Street's semiconductor and chip majors like Micron Technology Inc., Advanced Micro Devices Inc., Intel Corp., and Nvidia Corp. sank on Friday amid a highly volatile environment for AI-linked companies. Micron Technology Inc. whiplashed after closing with gains in the previous session to plunge as low as 7% to $919.54, while Advanced Micro Devices extended losses to trade 3% lower at $518.15. Intel shares slumped 4% to $95.60 after surging 11% during pre-market trading, despite the company's better-than-expected second quarter earnings that were released on Thursday post market hours. The latest selloff represents a significant reversal from the previous session's gains and highlights the continued volatility in the semiconductor sector as investors reassess AI-driven demand expectations.
SK Hynix Inc. and Samsung Electronics Co. are set to test investor appetite for memory chips as South Korea's stock market grapples with violent swings driven by leveraged chip bets. According to Bloomberg Intelligence, rising high-bandwidth memory prices and the rollout of higher-priced HBM4 chips critical for AI development should support Samsung and SK Hynix, with HSBC analysts noting that rising HBM4 shipments should assuage investor fears of an earnings slowdown in the second half of the year. SK Hynix's profits continue to be driven by higher average selling prices of its DRAM and NAND products essential for its broader AI investment plan, with both segments expected to see their fastest revenue growth since at least 2010. CEO Kwak Noh-Jung expects memory-chip shortages to persist beyond 2030 in a scramble to ramp up AI demand, while the company capped the amount of Korean-listed shares that can be converted into its ADRs on Thursday.
The semiconductor selloff comes after a challenging period that saw Micron Technology plunge over 12% in the last week alone and AMD decline over 8% in the same duration, while SK Hynix ADRs slumped 16.31%. As reported by Appreciate, companies across different industries are demonstrating how the AI investment cycle is evolving, with Taiwan Semiconductor reporting another record quarter with Q2 revenue of NT$1.27 trillion ($40.2 billion), up 33.7% year-on-year, while Netflix generated record quarterly revenue of approximately $12.6 billion, representing 13% year-over-year growth. According to Reuters, investors are focused on corporate earnings this week, with results from Intel, Alphabet and others still due, as market watchers are interested in whether the AI trade has more room to run given sky-high profit expectations for the second quarter. According to The Economic Times, investors are positioning ahead of key tech earnings, betting on AI-driven growth, with the Philadelphia SE Semiconductor Index rallying sharply in its second consecutive advance after ending Friday more than 20% below its late-June record high.
According to CNBC TV18, UBS noted in a late Monday note that this recent sharp sell-off in momentum stocks may be nearing its end, as most of the risky and leveraged positions have been unwound in the recent sell-off. Hedge funds have cut their long positions in momentum and semiconductor stocks by over 5% of the total Gross Market Value, bringing the net positioning in these semiconductor names back to levels last seen in April. The brokerage highlighted names such as Sandisk, Broadcom, Oracle Corp., KKR & Co., Datadog, Microsoft, and others in its list of momentum and semiconductor stocks. This positioning correction suggests that the semiconductor sector may be approaching a more stable valuation environment after the recent volatility.
According to Appreciate, Taiwan Semiconductor reported Q2 revenue of NT$1.27 trillion ($40.2 billion), up 33.7% year-on-year, while net profit climbed to approximately NT$706.6 billion, another company record. Moulik highlighted that demand for 3nm chips and CoWoS advanced packaging continues to exceed supply as Nvidia, AMD and the world's largest cloud providers race to expand AI computing capacity. He noted that semiconductor manufacturing has become one of the most critical bottlenecks in the global AI economy, with every meaningful AI application still depending on advanced chips that virtually every advanced chip depends on TSMC. The latest rally suggests that despite recent volatility, the long-term semiconductor cycle remains constructive because demand for AI computing, advanced chips and data centre infrastructure continues to expand.
