Chip selloff erases over $1 trillion in stock market value

U.S. chip stocks plunged on June 5, wiping out more than $1 trillion in market value as investor confidence faltered. The PHLX chip index dropped nearly 8.5% in afternoon trading, its worst single-day loss since Wall Street’s ‘Liberation Day’ tariff selloff in April 2025. Over two sessions, the index fell over 10%, reflecting growing unease about high-flying tech stocks, particularly as Elon Musk prepares SpaceX’s IPO next week with a $1.75 trillion valuation. Nvidia, the world’s most valuable chipmaker, fell about 6%, losing over $300 billion in market cap. Micron Technology dropped 11%, erasing $127 billion, while Marvell Technology lost 12% and AMD declined 10.5%. Broadcom, a major AI chip player, fell 7.5% after its weak quarterly report showed AI chip demand underperforming expectations. The selloff followed stronger-than-expected U.S. jobs data, which heightened fears of higher interest rates and pressured the broader market. The S&P 500 dropped 2.3%, while the PHLX index remains up 75% year-to-date despite the recent losses. Analysts noted that blindly buying dips in tech stocks had previously paid off, but that strategy reversed amid renewed caution. Investors appear concerned about overvaluation in AI-driven tech stocks, particularly as Broadcom’s struggles signal potential demand softening. The downturn comes as SpaceX’s upcoming IPO looms, adding to market volatility. Despite the steep losses, the sector retains strong year-to-date gains, though the correction underscores growing jitters over tech valuations.