The artificial intelligence (AI) boom suffered a massive blow as the technology sector’s hottest chip companies saw a staggering $1.3 trillion in market value vanish in less than 24 hours. The massive selloff triggered the deepest one-day drop for the PHLX chip index (.SOX) since March 2020, when the onset of the coronavirus pandemic threw global markets into disruption.
The panic swept through Wall Street’s favourite AI heavyweights, leaving massive financial damage in its wake, as reported by Reuters. Nvidia, the world’s most dominant AI chipmaker, plunged 6%, wiping out more than $300 billion from its market capitalisation. Micron Technology tumbled 13%, evaporating roughly $150 billion in market value, while Marvell Technology suffered a 17% collapse. Lisa Su-led Advanced Micro Devices (AMD) dropped nearly 11%, and Broadcom slumped 7.9%, bringing its devastating two-day losses close to 20%.
What Sparked the Trillion-Dollar Wipeout
The financial bleeding actually began on Thursday (June 4) after Broadcom released its quarterly financial report. While Broadcom has been one of the biggest winners of the AI gold rush, its latest numbers showed that demand for its custom AI chips fell short of Wall Street’s expectations. Broadcom’s weak report echoed across the financial world, fueling investor anxieties that the expensive AI trade may have grown too detached from reality. For over a year, tech investors have operated under a highly profitable strategy: “buy the dip” whenever tech stocks saw a slight decline. On Friday, that strategy officially hit a wall.
“You’ve had a lot of people here that were just blindly buying the dip. Blindly buying the dip had been winning you money, but that ended today,” said Dennis Dick, a proprietary trader at Triple D Trading.
Market Correction Timing
The timing of the market correction is especially tense for Silicon Valley. The two-day chip rout comes just as Elon Musk prepares to launch a blockbuster initial public offering (IPO) next week for SpaceX at an exceedingly high $1.75 trillion valuation.
