The chips that powered the artificial-intelligence rally are now leading its retreat.
The PHLX Semiconductor Index, the main benchmark for U.S.-listed chipmakers, which is closely tracked by the Invesco PHLX Semiconductor ETF (NYSE:SOXQ), has fallen for seven straight sessions.
That has happened only 15 times since 1994.
The index is down nearly 14% from its Oct. 6 close.
• Invesco PHLX Semiconductor ETF stock is facing resistance. Why is SOXQ stock retreating?
According to Benzinga Pro data, these are the worst-performing stocks over the past seven sessions among companies with at least a $50 billion market cap.
Two forces are behind the sell-off.
China’s ChangXin Memory Technologies reported progress on a denser memory chip design, raising fears of future oversupply.
Meanwhile, U.S. producer prices rose 6.3% from a year earlier in September, the fastest pace since December 2022. That keeps a Federal Reserve rate hike on the table.
Higher rates make it more expensive to borrow and build AI data centers. As a result, investors are dumping the companies that sell memory, storage and chipmaking tools to those data centers.
The Roundhill Memory ETF (NYSE:DRAM) has lost 21% since its Oct. 5 close.
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