AI Chip Stocks Plunge 12% Over Two Days as Investors Shift Focus
In the world of technology, the landscape is ever-shifting, and this week saw a significant shift in investor sentiment.
Semiconductor Stocks Crash
Semiconductor stocks experienced a sharp decline of 12% over two sessions, while the Dow hit a record high. This came as investors reallocated their portfolios away from AI chip makers towards enterprise software companies.
July 3, 2026 – 7:12 pm
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Summary:
- The PHLX Semiconductor Index dropped 6.3% on Wednesday and 5.4% on Thursday.
- Micron Technology led the way down, falling over 10% on Wednesday alone.
- Other notable declines included SanDisk, Applied Materials, Lam Research, Intel, and Marvell.
Macroeconomic Factors at Play
The selling pressure was exacerbated by a weak jobs report for June, which showed only 57,000 new jobs created, far below the expected 110,000. Revisions to April and May data further reduced job gains by a combined 74,000.
A Shift in Priorities
The rotation wasn’t about abandoning AI but rather a re-evaluation of where investment returns will come from. Enterprise software stocks, including ServiceNow, Snowflake, and Palantir, have seen significant gains.
Where the Money Went:
- ServiceNow, Snowflake, and Palantir led the way, with their respective ETFs up 35% since April.
- Palantir’s Q1 revenue hit $1.63 billion, a 85% year-over-year increase.
- ServiceNow projects $30 billion in subscription revenue by 2030, attributing a third to its AI product, Now Assist.
Valuation Concerns
While the first half of 2026 saw strong gains across all three major indices, investors are now carefully considering valuations in the face of rising interest rates and macro uncertainty.