Semiconductor ETFs took a hit in late Tuesday morning trading, with the hardest fall reserved for this year's top performer rather than the fund most exposed to Nvidia. The Invesco Semiconductors ETF (PSI) slid roughly 7.8% to $147.08 near 11:50 a.m. EDT on July 7, 2026, after surging 103.6% through July 6. In contrast, the VanEck Semiconductor ETF (SMH), which carries the largest Nvidia weighting at 18.41%, declined about 5.0% during the same period.
The selloff was broad across chip-focused funds. The iShares Semiconductor ETF (SOXX) lost 6.6%, the Invesco PHLX Semiconductor ETF (SOXQ) fell 6.0%, and the SPDR S&P Semiconductor ETF (XSD) dropped 6.8%. The Philadelphia SE Semiconductor index slid 5.5% to its lowest level in four weeks, according to Reuters. The Nasdaq Composite was off 1.02% at 09:58 a.m. ET.
Memory and Equipment Names Underperform
Contrary to the typical Nvidia-driven narrative, the steepest losses came from memory and chip-equipment stocks. Micron Technology (MU) tumbled about 7.3%, Advanced Micro Devices (AMD) fell 7.4%, and Intel (INTC) plunged 10.9%. Meanwhile, Nvidia (NVDA) slipped less than 1% at 11:50 a.m. EDT. This shift in risk profile highlights the vulnerability of ETFs heavily weighted toward memory and equipment names.
ETF investors have reason to pay attention, as the 2026 leaders were concentrated in these segments. Benzinga reported that Micron surged about 253% through July 6, while Applied Materials (AMAT) gained around 135%, Lam Research (LRCX) about 110%, and KLA Corp. (KLAC) roughly 96%. Nvidia was up just about 5% over the same period.
Strategic Context and Analyst Views
Bank of America's Vivek Arya pushed back on the recent selling in a note dated July 6. Arya expects global cloud and AI infrastructure spending to hit $1.5 trillion by 2027, stating that "history suggests periods of consolidation are often followed by renewed momentum." He called memory a "strategic AI enabler" and kept Micron as his top pick, maintaining a $1,550 price target.
Micron reinforced its bullish case on Monday by announcing a contract with Ford Motor Company (F) to supply memory and storage for future vehicles. This is one of 16 customer agreements Micron highlighted in its fiscal Q3 call. CEO Sanjay Mehrotra noted that cars require more advanced memory as they become "more intelligent and data-intensive." In a separate statement, Mehrotra emphasized the "strategic value of memory in the AI era" and said longer-term customer deals should make Micron's financials more stable.
Broader Market Implications
The selloff also affected international markets. Samsung Electronics (SSNLF) dropped in Seoul trading, despite reporting second-quarter operating profit up 19 times. Michael Field, chief equity market strategist at Morningstar (MORN), told Reuters that Samsung's results were "fundamentally good," but added that when sentiment turns negative, "negativity extends across markets."
A comparison by The Motley Fool highlighted the heightened risk of chip ETFs versus broader tech funds. The iShares Semiconductor ETF (SOXX) holds 30 stocks with a five-year monthly beta of 2.26, compared to the iShares U.S. Technology ETF (IYW) with 148 stocks and a beta of 1.43. The maximum drawdown over five years for SOXX was -45.8%, versus -39.4% for IYW. This underscores the volatility inherent in semiconductor-focused investments.
Tuesday's trading demonstrated that having less Nvidia exposure did not shield PSI when sellers targeted memory, equipment, and smaller chip stocks. SMH, with the largest Nvidia weight and heavy top-10 concentration, dropped less than the top 2026 performers, suggesting that diversification across the semiconductor landscape may not always provide protection during sector-wide selloffs.
