PiCK
Semiconductor Stocks Slide for Second Day as Wall Street Watches Rotation Into Cyclicals
Summary
- Wall Street sees the selloff in technology stocks, including semiconductors, as part of a likely sector rotation marked by profit-taking and a shift of money into cyclical stocks.
- Jefferies, Bank of America and Wells Fargo said Meta's use of idle computing capacity may be a strategy to sustain AI infrastructure investment, underscoring their view that the AI investment cycle remains intact.
- Blue Whale Capital identified memory semiconductors as a sector poised to benefit over the long term, while market attention is focused on whether the SK Hynix ADR listing can revive investor sentiment toward memory-chip stocks.
Forecast Trend Report by Period
Semiconductor stocks tumbled for a second straight session in U.S. trading, and Wall Street is increasingly focused on a rotation out of technology shares and into economically sensitive sectors that could persist for some time.
Concerns about a pullback in artificial intelligence infrastructure spending spread after reports that Meta is considering a cloud business to sell excess AI computing capacity to external customers. The news fueled selling in semiconductor stocks, one of the biggest beneficiaries of the AI investment cycle. Still, the prevailing view in the market is that the move reflects a correction in overheated technology positioning rather than the end of AI spending.
The Philadelphia Semiconductor Index fell 5.54%, extending its two-day loss to more than 11%. Marvell Technology dropped 9.84%, Arm Holdings fell 6.58%, Micron Technology lost 5.50%, Intel declined 5.25% and Advanced Micro Devices slid 4.26%. Nvidia also closed down 1.39%. Meta, which had surged a day earlier, fell 4.90%.
By contrast, money flowed into previously overlooked sectors such as financials, industrials, health care and consumer staples. The Dow Jones Industrial Average rose 1.14% to a record high, and the equal-weighted S&P 500 Index also set a fresh record. The tech-heavy Nasdaq fell 0.80%, but selling did not broaden across the wider market.
On Wall Street, many viewed the pullback as portfolio repositioning rather than a sign of slowing AI investment. Fundstrat co-founder Tom Lee said investors were rebalancing portfolios at the start of a new quarter. He added that cyclical shares such as industrials and financials, along with stocks that had lagged, could offer opportunities.
The case for the AI investment cycle remains intact as well. Jefferies, Bank of America and Wells Fargo said Meta's use of idle computing capacity could instead be a strategy to improve investment efficiency and support continued spending on AI infrastructure. Mark Yoo of Blue Whale Capital said investors should focus not on the companies making AI investments, but on the companies benefiting from them. He identified memory chips as a long-term beneficiary.
Attention is also turning to SK Hynix's planned American depositary receipt listing on July 10. With sentiment around AI chip investment recently under pressure, the market is watching whether SK Hynix can help revive appetite for memory-chip stocks.
