Chip sell-off drags Dow 680; Nasdaq’s biggest drop since 2025

A broad sell-off in semiconductor stocks knocked the Dow Jones Industrial Average down about 680 points and produced the Nasdaq’s largest single-day decline since 2025 during U.S. trading, as investors cut exposure to chipmakers that had driven recent gains.

Major chip suppliers and designers including Nvidia, Advanced Micro Devices, Intel, Broadcom, Qualcomm and Micron fell, pulling technology-heavy indexes lower. The S&P 500 also declined as losses in growth stocks outweighed gains in defensive sectors. Trading volume on major U.S. exchanges rose above recent levels as investors reduced risk.

Market participants pointed to several factors. Many semiconductor shares had climbed sharply over the past year on expectations for strong demand for artificial-intelligence hardware, prompting profit-taking. Corporate customers and some suppliers reported softer order trends and cautious near-term commentary, leading analysts to revise revenue expectations for chip companies. Rising U.S. Treasury yields increased the discount rate applied to future earnings, adding pressure on high-growth names.

Exchange-traded funds that track the semiconductor sector saw notable outflows, and suppliers of equipment and materials also declined. Because chip companies represented a large portion of recent index gains, lower stock prices in the sector amplified moves in the major averages.

A market strategist at a New York investment firm noted, “After an extraordinary stretch of gains, investors are recalibrating what the next few quarters will look like for chip demand. When earnings expectations and valuation multiples are high, any sign of cooling can trigger a rapid unwind.”

A portfolio manager at a mid-size asset manager added, “There was a lot of exposure to the AI hardware theme. When some firms didn’t provide the kind of near-term visibility investors wanted, reallocations happened quickly.”

Analysts have been watching consumer electronics, automotive and data-center spending for signs of weakening demand that would affect chip orders. Quarterly earnings season and guidance from major corporate customers are expected to be key near-term catalysts for further price changes.

Investors also factored in inflation expectations and shifting views on interest rates when valuing growth versus cyclical stocks. Market participants noted that sudden changes in sentiment about a high-beta sector like semiconductors can spill over into broader indexes.

Traders and fund managers plan to monitor upcoming corporate updates and macroeconomic data to assess demand trends and margin prospects for chipmakers.