SOXX Heads For 7th Straight Losing Session As Inflation, AI Spending Fears Deepen — Chip Stocks Face $1 Trillion Wipeout

UBS described the decline as ‘more of a recalibration of expectations than a fundamental break in the AI investment story’ and said earnings season should matter more for chip sentiment than competition and financing concerns.

• Hotter-than-expected U.S. inflation raised fears of further interest-rate hikes, pressuring chip stock valuations.
• Concerns over increasing competition from Chinese memory chipmakers weighed on the sector.
• UBS favors semiconductor and robotics equipment companies and ranks memory stocks lower, citing potential supply increases over the medium term. 

The iShares Semiconductor ETF (SOXX) fell more than 4% on Wednesday, putting it on track for its seventh straight losing session, marking its longest losing streak since May 2025. 

Hotter-than-expected U.S. inflation and mounting concerns over artificial intelligence (AI) infrastructure spending weighed on chip stocks.

Among SOXX's largest holdings, Advanced Micro Devices (AMD), the fund's most heavily weighted stock, was down over 5% at the time of writing, while Intel (INTC) fell over 3%. 

Nvidia (NVDA) and Micron Technology (MU), each accounting for over 7% of the ETF, declined by over 2%.

Chip Stocks Face $1 Trillion Market-Value Wipeout

The Philadelphia Semiconductor Index (SOX) fell over 3.5%. The index has fallen about 10% over six sessions. According to a Bloomberg report, the broader semiconductor sell-off could erase more than $1 trillion in market value.

Among the hardest-hit stocks, Arm Holdings (ARM) plunged nearly 16%, Applied Materials (AMAT) dropped about 14%, and Intel lost 11% over the six-session period.

Broadcom CEO, IMF Warnings Pressure Chip Stocks

Chip stocks came under pressure on Monday after Broadcom (AVGO) CEO Hock Tan warned that access to capital, rather than semiconductor or memory shortages, could become the biggest constraint on AI expansion.

Speaking at a conference in Singapore, Tan also compared some speculative AI investing to casino gambling.

Selling pressure continued on Tuesday as the International Monetary Fund (IMF) warned that weaker-than-expected returns from AI investment could trigger a correction in technology stocks, amplified by rising leverage and concentrated market exposure.

Concerns over increasing competition from Chinese memory chipmakers also weighed on the sector.

Hotter Inflation Raises Rate Hike Fears

The sell-off deepened after the Bureau of Labor Statistics on Wednesday reported that the U.S. Consumer Price Index (CPI) rose 3.7% year over year in September, up from 3.4% in August and above economists' expectations of 3.6%.

The reading raised concerns about further Federal Reserve interest-rate hikes, which could increase borrowing costs for companies financing large-scale AI infrastructure investments.

UBS Sees Reset, Not Fundamental AI Breakdown

In a Wednesday research note, Ulrike Hoffmann-Burchardi, UBS Global Wealth Management's Chief Investment Officer Americas and Global Head of Equities, described the decline as “more of a recalibration of expectations than a fundamental break in the AI investment story.”

UBS expects the upcoming earnings season to play a bigger role in semiconductor sentiment than concerns over competition and financing. The bank forecasts third-quarter S&P 500 earnings-per-share growth of around 28%, supported partly by AI spending and cloud demand.

Within the AI supply chain, UBS favors semiconductor and robotics equipment companies, followed by foundries, outsourced semiconductor assembly and testing providers, and computing firms. It ranks memory stocks lower despite attractive valuations, citing potential medium-term supply increases.

What Retail Thinks About SOXX

On Stocktwits, retail investors’ sentiment around SOXX ETF remained ‘bearish’. So far this year, the ETF has rallied more than 66.74%. By comparison, the VanEck Semiconductor ETF (SMH) has risen around 52% over the same period.

See Also: Memory Stocks Extend Losses For Third Straight Day -- Rosenblatt Calls CXMT-Driven Sell-Off 'Overblown'

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