U.S. chip stocks drop for eight consecutive sessions! $2 trillion wiped out in market value, marking the longest losing streak since 2008

A wave of market skepticism regarding the investment returns of artificial intelligence has pushed chip stocks into an eight-day losing streak, marking the longest consecutive decline since the 2008 financial crisis.

The Nasdaq plunged over 4% this week, posting its worst weekly performance since the tariff turmoil of April 2025. The Philadelphia Semiconductor Index tumbled 11.4% for the week, with a cumulative eight-day loss exceeding 13%, wiping out around $2 trillion in market capitalization.

The high costs of AI infrastructure and the unclear prospects for corporate profitability are prompting investors to reassess the fundamental logic of the sector. Jameel analyst Fawad Razaqzada commented:

This week’s price action indicates the focus of market debate is starting to shift. The question is no longer how large the AI market space can get, but rather how much profit can ultimately be made given the enormous investment required to achieve it.

Bank of America’s Michael Hartnett warned that risk aversion will dominate markets in the coming weeks as investors seek to avoid AI trades, high interest rates, and uncertainty triggered by the US midterm elections.

The Philadelphia Semiconductor Index fell 11.4% this week, marking eight straight days of declines—the longest such streak since the 2008 financial crisis and the fifth time this year the index has retraced by at least 10%.

According to Stocktwits, semiconductor stocks have lost roughly $2 trillion in market value during the eight-day slide. Based on the drawdown from each stock’s 52-week high, the entire semiconductor sector has lost close to $4 trillion in market value. Still, the Philadelphia Semiconductor Index remains up around 60% year-to-date.

On Friday, the ETF (SOXQ) tracking this index plunged nearly 4%. Retail sentiment towards SOXQ on the Stocktwits platform dropped from “neutral” to “bearish” in the past day.

The losses were widespread. The index’s top holding Nvidia tumbled over 6% for the week. Semiconductor equipment makers Applied Materials and Kotian Semiconductor saw even steeper pullbacks, indicating selling pressure is not limited to chip design firms.

Memory chip makers also took a hit, with Micron plunging 14.6% this week, while the Memory Chip Index slumped 17.6% over the same period.

Amid the recent selloff, CoreWeave has become the focus of the market due to its heavy reliance on high-yield debt to finance AI infrastructure expansion.

On Friday, US cloud computing service provider CoreWeave dropped another 11.9%, bringing its weekly loss to over 25%. On the same day, its bonds fell to levels that typically indicate financial distress, reflecting deep concerns over the sustainability of high-yield debt financing.

According to Bloomberg, the capital expenditure by tech giants, particularly hyperscale cloud service providers, is nearing $1 trillion annually, a significant portion of which is debt-funded. With US Treasury yields surging—the 10-year yield reaching 5.09%—financing costs continue to climb.

Fawad Razaqzada noted:

Higher interest rates are hitting AI trades with a double blow: they reduce the present value of future cash flows, and simultaneously raise the cost of financing the infrastructure needed for the next phase of AI growth.

He added that these concerns are now starting to spill over into the credit markets.

ARK founder “Cathie Wood” holds a different view. She likened CoreWeave to Coinbase, noting that the latter’s bonds also once came under pressure before benefiting from the crypto industry boom. She revealed that ARK increased its holdings in CoreWeave and Cerebras during this week’s decline.

Amid the stock downturn, Nvidia CEO Jensen Huang told Bloomberg’s Emily Chang at an event in Berlin that the benefits of AI technology would soon outweigh investors’ concerns.

Jensen Huang said:

All of this will eventually pass, for a very simple reason—it will be transformative and will positively impact every industry and every country. There’s no doubt in my mind this will continue, and right now, we’re only at the beginning.

Market strategists are warning investors not to get overly bearish. SpotGamma’s Brett Pachuba told CNBC that a positive announcement from major tech firms like Meta or Google could reignite demand for AI stocks, potentially leaving under-positioned investors at risk of missing out.

He commented:

I truly believe investors should be especially vigilant when the crowd starts shifting into a bearish mindset.

Dave Maza, CEO of Roundhill Investments, noted that sentiment among memory chip investors has turned negative because of industry competition, public statements from Broadcom CEO Hock Tan, and macroeconomic challenges.

Nonetheless, he emphasized that actual demand for memory chips remains robust, with supply sold out through 2027 and customer demand even stretching into 2028. Annex’s Brian Jacobsen added:

The most noteworthy event this week wasn’t inflation data or the Fed’s messaging, but how the market reacted. As multiple AI-related stocks corrected, funds shifted into healthcare, financials, materials, and small-to-mid cap companies, all of which performed relatively well.