Global chip selloff deepens as Meta cloud plan spooks investors

Meta plans to sell excess data center capacity through a new cloud unit called Meta Compute, sparking fears that AI compute supply is outpacing demand.cnbc+1
The Philadelphia Semiconductor Index plunged over 6% on Wednesday, with Micron dropping over 10% and Intel sinking 9%.usnews
The selloff spread to Asia Thursday, with South Korea's Kospi falling sharply and SK Hynix and Samsung Electronics tumbling, per the AP.usnews

U.S. semiconductor stocks suffered their steepest single-day loss in weeks on Wednesday as the Philadelphia Semiconductor Index PHLX Semiconductor plummeted 893 points, or 6.27%, to close at 13,353.28. The selloff, triggered by Meta Platforms' announcement that it plans to lease surplus AI computing power through a new cloud business, rattled investors across the chip sector and spread to Asian markets on Thursday.indexes.nasdaqomx+1

Meta Compute Sparks AI Demand Fears

The rout was set off after Bloomberg reported that Meta is building a cloud infrastructure unit called Meta Compute, which would sell excess data center capacity to outside customers. While Meta's own shares surged nearly 9% on the news, investors read the move as a warning that AI compute supply may be outstripping demand, hammering chipmakers and GPU cloud providers.yellow+2

Micron Technology was the hardest hit among major names, dropping more than 10%, while Intel sank 9% and AMD Advanced Micro Devices, Inc. fell 6.9%. Broadcom lost 2.2%, while Nvidia slipped 1.3%. TSMC's Taiwan Semiconductor Manufacturing Company Limited ADR also fell sharply during the session. The leveraged Direxion Daily Semiconductor Bull 3X Shares collapsed 16.38% in a single day.finance.biggo+4

Bubble Warnings Add Fuel to the Fire

The selloff landed just one day after Reuters reported that Bank of America's proprietary Bubble Risk Indicator had reached 0.91 for the PHLX Semiconductor Sector on a scale where 1 signals extreme bubble-like price action. BofA analyst Michael Hartnett has warned for weeks that AI stock euphoria is pushing markets toward concentration levels reminiscent of historic speculative bubbles.reuters+2

The S&P 500 slipped 0.2% to 7,483.23, and the Nasdaq Composite dropped 0.7% to 26,040.03, while the Dow Jones Industrial Average edged down less than 0.1%.tradingkey+1

Selloff Spills Into Asia

The damage extended to Asian trading on Thursday. South Korea's Kospi sank 5.1%, with memory chip maker SK Hynix losing 7.7% and Samsung Electronics tumbling 6.4%, according to the Associated Press. Taiwan's Taiex declined 1.1% as TSMC shares fell 1.8%, while Japan's Nikkei 225 lost 1.5%, with chip equipment maker Tokyo Electron shedding 5.6%.usnews

The semiconductor index had surged 81% during the second quarter, putting it on track for its best three-month stretch on record before Wednesday's reversal. Whether the pullback marks the beginning of a deeper correction or another buying opportunity in the AI trade remains the central question facing investors as the second half of 2026 begins.briefs

Sources (50)