Intel Corporation (INTC) saw its shares plunge 11.4% on Friday, closing at $99.17, as a massive sell-off in the semiconductor sector wiped out approximately $1.3 trillion in market capitalization among U.S.-listed chipmakers. The PHLX Semiconductor Index dropped 10.3%, marking its steepest single-day decline since the onset of the COVID-19 pandemic in March 2020.
The sell-off was triggered by a combination of factors, including disappointing guidance from Broadcom (AVGO) and renewed concerns that the Federal Reserve may keep interest rates higher for longer. A stronger-than-expected May jobs report reignited fears of additional rate hikes, which disproportionately impact high-growth sectors like technology.
Intel's decline came despite a Thursday announcement that Foxconn, the world's largest contract electronics manufacturer, had partnered with the chipmaker to build next-generation AI data center infrastructure. The deal, which includes Intel Xeon processors and AI accelerators, was largely ignored by investors as the broader market panic took hold.
Other major chip stocks also suffered heavy losses. Nvidia (NVDA) fell 6.2%, Advanced Micro Devices (AMD) dropped nearly 11%, and Broadcom lost 7.9% after its quarterly earnings failed to meet lofty market expectations for its custom AI chip business.
The selling pressure was broad-based, with Intel trading in a wide range between $96.81 and $109.28 on volume exceeding 144 million shares. The stock had been a popular pick in the AI-driven rally earlier this year, but doubts about the pace of its turnaround have persisted.
Market strategists characterized Friday's sell-off as a positioning shakeout rather than a fundamental shift in the chip industry's outlook. Ryan Detrick, chief market strategist at Carson Group, said “the dam just broke today” after an extended run-up in tech and semiconductor stocks.
Ohsung Kwon, chief equity strategist at Wells Fargo, noted that the semiconductor sector was “way overbought” but stopped short of declaring an end to the chip bull market. Anthony Saglimbene at Ameriprise Financial added that the “secular tailwinds of AI still exist,” even as some investors take profits.
Intel’s rally had been particularly strong, with both Intel and AMD surging over 160% from their March 2020 lows. The S&P 500 technology sector now accounts for more than 39% of the index by market capitalization, exceeding its weight during the 2000 dot-com bubble.
Looking ahead, Intel faces significant challenges. Its foundry division must prove it can manufacture chips for external customers and generate sustainable profits. The company’s ability to maintain its status as an AI recovery play will depend on whether the market’s enthusiasm for chip stocks returns after this sharp correction.
