Key takeaways
- All 30 major semiconductor stocks declined during Monday's trading
- Nvidia shares retreated further from their October record high
- AI spending concerns and rising yields pressured technology valuations
U.S. semiconductor stocks extended their sell-off Monday, October 12, with all 30 companies in the PHLX Semiconductor Index trading lower as Nvidia shares fell 1.7%. The broad decline pushed the chipmaking benchmark down approximately 2.3% intraday, extending a losing streak that has erased roughly 7% of its value.
The weakness spread across technology stocks, dragging the Nasdaq Composite down around 0.3% even as the Dow Jones Industrial Average advanced approximately 0.4%. According to Nasdaq's official index data, the PHLX Semiconductor Index tracks 30 major chip companies, making Monday's simultaneous declines a notable sign of pressure across the industry.
Nvidia Stock Falls Further From $239 Record
Nvidia stock declined about 1.7% during Monday's session, putting it roughly 5.8% below its October 6 record high of $239.24. The broader semiconductor index was headed toward its lowest closing level since September 18, according to intraday market reporting.
The iShares Semiconductor ETF (SOXX) also dropped approximately 2.5%, extending its losing streak toward five consecutive sessions. The decline followed last week's Nvidia and AMD sell-off, when uncertainty surrounding OpenAI's reported revenue figures raised questions about the financial returns supporting massive AI infrastructure spending.
The concern is increasingly about whether AI companies can generate enough revenue to justify the billions being invested in chips, computing infrastructure and data centers. These questions have become particularly important as companies take on additional borrowing to finance AI spending.
Nasdaq Weakens as Wall Street Rotates Away From Tech Stocks
Technology was the weakest S&P 500 sector Monday, falling approximately 1%, while nine of the index's 11 sectors were higher. Around 330 S&P 500 stocks were advancing, illustrating how concentrated technology losses outweighed gains elsewhere.
The divergence contrasts with the recent Nasdaq rally, when large-cap technology companies continued climbing despite Treasury yields above 5%. Elevated bond yields now add another challenge for expensive growth stocks because they reduce the present value of expected future earnings.
Deutsche Bank strategists also downgraded technology stocks from overweight to neutral, citing crowded positioning and less attractive risk-reward prospects. Their caution suggests that even strong quarterly earnings may not immediately reverse the sell-off.
AI Stocks Face Earnings Test This Week
Investors will closely watch upcoming results from ASML and Taiwan Semiconductor Manufacturing Company, two important suppliers to the global chip industry. Their earnings and commentary could provide fresh evidence about whether demand for AI computing infrastructure remains strong enough to support current valuations.
The results arrive as oil prices above $106 and elevated Treasury yields complicate the broader stock market outlook. For Nvidia and other semiconductor stocks, the immediate test is whether earnings expectations can withstand growing scrutiny of AI spending and financing.
