The AI chip trade cracked this week, and the hunt for what replaces it has begun
TL;DR
Semiconductor stocks lost 12% in two sessions while the Dow hit a record, as investors rotated from AI chip makers to enterprise software companies. A weak jobs report crushed rate-hike odds.
The trade that defined the first half of 2026, buying anything with proximity to a GPU, broke apart in the holiday-shortened week before Independence Day. The PHLX Semiconductor Index, which had surged more than 80% in the first half, sank 6.3% on Wednesday and 5.4% on Thursday, a two-session decline of roughly 12%.
While chip stocks cratered, the Dow Jones Industrial Average closed at a record 52,900 on Thursday, lifted by a 5% surge in Apple after Bloomberg reported the company had instructed suppliers to prepare 10 million foldable iPhones for a launch this autumn. All three major indices finished the week higher despite the rotation.
The numbers behind the crack
Micron Technology led the decline, falling...
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