PHLX Chip Index Crashes 10.3% on Broadcom Shock, June 06

U.S. chipmakers suffered their worst day in over six years on Friday as the PHLX Semiconductor Index fell 10.3%, wiping out $1.3 trillion in market value. The selloff was triggered by Broadcom’s disappointing AI chip guidance earlier in the week and stronger-than-expected May jobs data that raised expectations for Federal Reserve rate hikes. Major semiconductor stocks including Micron Technology, Marvell Technology, and Advanced Micro Devices led the decline.

Broadcom’s Guidance Miss Sparks Sector Rout

Broadcom reported that demand for its custom AI chips fell short of expectations, failing to raise its full-year AI chip sales guidance. The company expects $56 billion in AI chip sales for fiscal 2026, below the $57.6 billion consensus estimate. This disappointment reverberated across Wall Street on Thursday and intensified on Friday, with Broadcom losing 7.9% on the day for a two-day loss of nearly 20%.

Micron and Marvell Lead the Losses

Micron Technology tumbled 13%, erasing $150 billion in market value, while Marvell Technology gave back 17%. Advanced Micro Devices lost almost 11%, and Nvidia fell 6%, cutting over $300 billion from its market cap. The iShares Semiconductor ETF dropped 10% for its worst day since March 2020. Even after Friday’s losses, the PHLX index remains up 73% year to date.

Jobs Data and Rate Hike Fears Weigh on Tech

The May jobs report showed 172,000 positions added, exceeding expectations and pushing 10-year Treasury yields to 4.54%. CME FedWatch data showed December rate hike odds rose to 43% from 26% previously. The S&P 500 fell 2.6% and the Nasdaq dropped 4.2%, marking its worst day since April 2025. Investors who had been buying dips in semiconductor stocks faced margin calls and forced selling.

Sector Remains Overbought Despite Correction

Analysts noted the semiconductor sector was significantly overbought before the selloff. One trader said momentum buyers who had profited from dip-buying in recent months faced a reversal. Despite the sharp two-day decline of 12%, the PHLX index hit a record high just two days earlier, highlighting how quickly sentiment shifted in the high-flying chip sector.

Final Thoughts

The chip sector’s 10.3% plunge erased years of gains in days, driven by Broadcom’s AI disappointment and rate hike fears. With Meyka rating Micron a B+ and Marvell a B+, the data suggests both remain fundamentally sound despite the sharp correction.

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