NVIDIA stock fell 3.5% as a broad chip sector selloff wiped out more than $1 trillion in market value this week, with investors reassessing the sustainability of massive artificial intelligence infrastructure spending. The decline marks the latest chapter in a volatile stretch for semiconductor stocks that have led much of the market’s AI-driven rally over the past year.
The selloff, which accelerated through late July, hit the world’s most valuable chip companies hard. NVIDIA alone lost $238 billion in market value since Friday’s market close, while SK Hynix shed $176 billion, Samsung Electronics dropped $173 billion, and Micron fell $113 billion, according to CNBC analysis. AMD lost around $110 billion and Taiwan Semiconductor Manufacturing Co. (TSMC) declined $119 billion. In total, 20 of the world’s most valuable chip stocks lost $1.3 trillion since market close on Friday.
The Philadelphia Semiconductor Index (SOX), which tracks the 30 largest U.S.-traded chip companies, has risen 92% over the past 12 months despite a nearly 20% drop over the past month, illustrating the dramatic swings in investor sentiment around AI-related stocks. The sector has been one of the main beneficiaries of the AI boom as companies poured capital into data centers and infrastructure.
SK Hynix’s earnings report on Tuesday proved to be a turning point. The memory chipmaker posted record quarterly profit and revenue but missed analyst estimates, triggering sharp selling in memory stocks across Asia and the U.S. SK Hynix shares dropped 14.65% in Seoul trading, while Samsung Electronics lost more than 13%, rippling losses through the entire semiconductor supply chain.
Analysts attribute the decline primarily to sentiment and valuation concerns rather than fundamental deterioration. “This decline appears to be driven largely by sentiment rather than fundamentals. Simply put, it’s loss of confidence,” said Michael Field, chief equity strategist at Morningstar. “We continue to see upside in many AI names, but these are growth stocks, and much of their value comes from cash flows expected far out into the future, which requires a lot of faith from investors.”
The sharp pullback reflects investor concerns that AI infrastructure spending may be “peaking faster than expected,” according to Charlie Dai, VP principal analyst at Forrester. Hyperscaler capital expenditure has surged dramatically—UBS estimated hyperscalers’ capex would rise 76% in 2026 to approximately $673 billion—but investors are now questioning whether near-term revenues can justify such unprecedented spending levels. “Investors are reassessing whether near-term revenues can justify unprecedented AI spending levels, while some also worry about growing competition in chips and AI infrastructure,” Dai said, though he added the selloff is “less about weakening AI demand and more about a repricing of expectations after an exceptionally strong rally.”
The recent volatility in chip stocks follows reports of a $250 billion OpenAI financing deal that sparked earlier selloffs, and concerns about whether major technology companies can sustain the massive capital outlays required for AI infrastructure buildout. Similar selloffs have roiled the sector throughout 2026, with a $1.3 trillion wipeout occurring in June following Broadcom’s AI revenue miss, demonstrating how sensitive chip valuations have become to any sign of slowing demand or profitability concerns.
Despite the sharp pullback, some investors view the decline as an opportunity. “The recent market pullback has brought valuations to more attractive levels, creating opportunities for us to add exposure to high quality businesses at more reasonable prices,” said Kieron Poon, investment director of Asian equities at Aberdeen Investments. David Riedel, founder and president of Riedel Research Group, told CNBC that the market is “giving back a little bit of the froth that was in the AI market,” and that memory chipmakers “will be fine” but “just have to give back some of those sudden gains.”
Sources
- CNBC — Chip stocks shed more than $1 trillion, NVIDIA lost $238 billion, SK Hynix $176 billion, Samsung $173 billion since Friday market close; analyst commentary from Morningstar and Forrester
- TradingView — NVIDIA down 3.55% in the past 24 hours as of July 30, 2026
- Reuters — NVIDIA’s 3.5% decline on July 17 when Apple overtook it as world’s most valuable company
- UBS — Hyperscaler capex expected to rise 76% in 2026 to $673 billion
- Forbes — AI spending concerns and sustainability fears driving semiconductor selloff in July 2026
