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A day after Wall Street’s biggest hit in three months closed, high-flying semiconductor stocks opened the third quarter with a sharp decline.
memory maker micron It fell 11%, wiping out $138 billion in market capitalization. intel Rival chip makers also fell 9%. advanced micro device It fell 7%.
These three stocks soared in the second quarter, adding $2 trillion in combined value. That’s because investors bet that building artificial intelligence would require more central processors than just graphics processors. Nvidia.
The VanEck Semiconductor ETF (SMH), an index that tracks semiconductor stocks, fell more than 5% on Wednesday, a day after its best quarter in the fund’s history, and rose 71% from the beginning of April to the end of June.
Other big decliners on Wednesday included semiconductor equipment names. ram research, KLA Corporation. and applied materials All more than doubled in the second quarter. They all fell by at least 10%.
The market was hampered by the following reports: MetaThe company, one of the largest buyers of AI infrastructure, may be looking to rent out excess computing power. This has raised concerns that the supply of AI processing is starting to catch up with demand.
Meta is one of a small group of so-called hyperscalers, Internet companies that spend hundreds of billions of dollars a year building AI data centers. The move was seen as a positive for Meta, which rose more than 9% on Wednesday after a lackluster second quarter.
KeyBanc Capital Markets analysts, who are recommending the stock to buy, said in a note to clients that the move “positions Meta further on the corporate side of the market, with the potential for a more immediate return on investment.”
Richard Saperstein, chief investment officer at Treasury Partners, said he is “supporting hyperscalers” because the market recognizes their strength in AI trading.
“Revenues are accelerating, but multiples are compressing,” Saperstein said on CNBC’s “Closing Bell.” “All I can say is that hyperscalers are capital-intensive and asset-focused, whereas they are valued as asset-focused.”
Whatever concerns permeate some infrastructure stocks, they have little to do with the latest financial results. Micron last week reported that sales more than quadrupled in its latest quarter, while its gross profit margin, the profit left after accounting for cost of goods sold, rose to 84.9% in the third quarter from 39% a year earlier.
Video: Interview with Cramer and Micron CEO
