A sharp selloff swept through semiconductor stocks on Wall Street on Tuesday, wiping out gains across some of the biggest beneficiaries of the artificial intelligence boom as investors reassessed lofty valuations and growing spending across the sector.
Memory-chip makers led the decline, with SanDisk plunging 12%, Micron Technology falling 9%, and AMD dropping 5% in premarket trading. Other chipmakers were also under pressure, with Intel losing nearly 7% and Western Digital sliding about 8%.
The weakness in semiconductor stocks came as the broader technology sector suffered a sharp correction. Futures linked to the Nasdaq 100 fell about 2.5%, putting the index on track to erase more than $1 trillion in market value.
Investors have poured billions into AI-linked stocks over the past year, making chipmakers among the strongest performers on Wall Street. Memory chip companies, which stand to benefit from surging demand for AI servers and data centres, have been among the market's top gainers in 2026.
However, Tuesday's decline suggests investors are becoming more cautious ahead of upcoming earnings announcements and amid growing concerns over whether the massive spending on artificial intelligence can generate returns quickly enough to justify current valuations.
The pressure was not limited to US markets. South Korean memory-chip makers also recorded steep losses, reflecting broader concerns about the sustainability of the AI-driven rally.
Also read: Catch all the US stock market action live here
The selloff coincided with another sharp decline in SpaceX, one of the newest and most closely watched AI-linked listings. SpaceX shares fell another 3.6%, extending a three-day rout that has wiped out more than $600 billion from its market value. The company briefly fell below a $2 trillion valuation, just days after its blockbuster Nasdaq debut.
Investors are increasingly scrutinising the enormous capital commitments being made by technology giants to build AI infrastructure. Companies such as Microsoft, Amazon, Alphabet and Meta have committed hundreds of billions of dollars toward data centres, chips and AI computing capacity.
While demand for AI remains strong, market participants are looking for clearer evidence that these investments will translate into sustainable revenue growth and profitability. The latest correction suggests some investors are choosing to lock in gains after one of the strongest runs ever seen in AI-related stocks.
Six of the seven "Magnificent Seven" technology companies were trading lower, highlighting how concerns around AI spending and valuations have spread beyond chipmakers to the broader technology sector.
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