Chip Stocks Slide as Investors Rotate to Value Ahead of Big Tech Earnings

Semiconductor stocks sold off sharply last week as concerns about the durability of the artificial intelligence trade weighed on markets, with the Morningstar Global Semiconductors Index falling 5.8% through Thursday. Investors rotated out of growth stocks into value, while data center bonds scraped fresh lows amid worries about AI overspending. The selloff hit major chipmakers hard, with Nvidia down 5.2%, Taiwan Semiconductor Manufacturing down 8.4%, and Broadcom down 7.8%. CoreWeave shares plunged as its debt began trading at distress levels, while the 10-year US Treasury yield dropped to 5.13%. Some strategists view the volatility as a recalibration rather than a fundamental break in the AI investment story. Big Tech earnings begin this week, with investors watching cloud growth at Microsoft, Alphabet, and Amazon, plus capital expenditure guidance. Hyperscalers are on track to spend over $750 billion on capex this year, and Goldman Sachs economists argue AI's effect on inflation is overstated and near its peak.