The Chip-Stock Slide Isn’t Over. The AI Trade Is Still Under Pressure. But ‘No One Is Short’

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Even with their recent losses, many chipmakers remain among the S&P 500’s biggest gainers for the year. Daniel Ceng / Anadolu / Getty Images

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Key Takeaways

• Chip stocks slid Thursday, extending what’s been a tough few weeks for the sector and the broader AI trade.

• Some experts have suggested a pullback could be healthy after a torrid rally earlier this year.

The chips are down today.

Shares of major chipmakers plunged Thursday, extending what’s been a rough stretch for the AI trade that has come despite a string of solid earnings reports. Shares of TSMC ( TSM) were down 3% in recent trading after the world’s largest contract chip manufacturer posted quarterly results that topped analysts estimates.1 Shares of Nvidia ( NVDA), Advanced Micro Devices ( AMD), and Intel ( INTC) were also lower. The PHLX Semiconductor Sector Index ( SOX) was down 3%.

Memory chipmakers and data storage stocks have been among the strongest performers in the AI trade. Today, they were among the major indexes’ leading decliners, with Sandisk ( SNDK), Seagate ( STX) and Micron Technology ( MU) all down more than 5%. The Roundhill Memory ETF ( DRAM) fell 7%.

Why This Matters to Investors

Thursday’s stock slide points to sustained worries about whether the chip stocks still have room to rise after a torrid rally this year.

Worries about growing expenditures on AI infrastructure and the sustainability of spending could be weighing on sentiment. TSMC said today that it would raise its capital expenditures forecast for the year to $60 billion to $64 billion, up from $52 billion to $56 billion. The company also said it plans to invest another $100 billion in its operations in Arizona to meet demand.

A number of Wall Street analysts have said in recent weeks they would view the pullback in chipmakers and other AI stocks as healthy, suggesting that it could be an opportunity to buy the shares at a discount. A survey of fund managers by Bank of America published earlier this week found that many “trimmed July tech longs to hedge AI risks,” but “no one [is] short,” and semiconductors remain the “world’s most crowded trade.”2

Related Education

AI Stocks Face Uncertainty: If the Market Isn’t ‘Pricing In Promise,’ What’s Next for Tech? \ \ These Experts See 'Screaming Buys' in AI Stocks After a Recent Pullback\ \

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Even with their recent losses, many AI-related stocks are among the S&P 500’s biggest gainers for the year so far. Sandisk leads the list of top performers for 2026 with shares up over 500%, followed by AI server maker Dell ( DELL), memory chipmaker Micron, and Seagate.

Also worth watching today: Data center stock Csquare, which is set to start trading sometime Thursday after its IPO priced below its marketed range.

For more reporting from Investopedia on today’s market moves, click here.

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1. TSMC. “ TSMC Reports Second Quarter EPS of NT$27.25.”

2. Bank of America. “Global Fund Manager Survey: Pain trades: duration, dividend, defensives.”

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