Qualcomm drops 13% as chip stocks pull back from record AI-driven rally
Chip stocks saw a sharp selloff on Tuesday as investors moved into risk-off mode following stronger-than-expected inflation data and rising geopolitical uncertainty. Shares of Qualcomm plunged nearly 13 % in their worst session since 2020, while Intel and Micron Technology also declined significantly. The broader semiconductor sector weakened as enthusiasm around the AI boom gave way to concerns over inflation, interest rates, and elevated valuations. Despite the correction, analysts believe long-term demand for AI infrastructure, memory chips, and next-generation computing remains strong, though volatility across semiconductor stocks is expected to remain elevated in the near term.
Chip stocks witnessed a sharp pullback on Tuesday as investors shifted into risk-off mode following hotter-than-expected inflation data, triggering a broad decline across semiconductor companies that had recently benefited from the artificial intelligence boom.
Shares of Qualcomm plunged nearly 13 per cent, marking the company’s worst trading session since 2020. Other major semiconductor firms also declined sharply, with Intel falling around 8 per cent, while Micron Technology dropped over 6 per cent. The broader semiconductor sector also came under pressure, with the SOXX sinking roughly 5 per cent during trading.
The selloff comes after months of strong gains in chip stocks, fuelled largely by enthusiasm around artificial intelligence infrastructure and next-generation computing demand. While AI-related rallies were previously dominated by Nvidia, investors had recently begun expanding bets toward companies involved in CPUs, memory chips, connectivity hardware, and AI agents.
Analysts say the latest correction reflects growing investor caution amid concerns that persistent inflation and rising geopolitical tensions, including the ongoing Iran conflict and elevated oil prices, could weigh on technology spending and broader market sentiment.
The recent AI rally had significantly boosted semiconductor companies beyond Nvidia. Investors increasingly shifted attention toward chipmakers expected to benefit from the next phase of AI development, particularly “agentic AI” systems capable of independently performing tasks and interacting with software ecosystems.
That optimism helped companies such as Qualcomm, Intel, Micron, and SanDisk post strong gains in recent months. SanDisk shares, for instance, had reportedly surged more than sixfold since the beginning of the year before Tuesday’s decline.
Memory chip manufacturers were also viewed as key beneficiaries of the AI expansion due to rising demand for high-bandwidth memory and storage components used in AI data centres. However, Tuesday’s broad-based selloff suggests investors may now be reassessing valuations after the sector’s rapid run-up.
Market watchers note that despite the sharp correction, long-term demand for AI infrastructure remains intact. However, concerns around inflation, interest rates, and global uncertainty are likely to increase volatility across high-growth technology stocks in the near term.
