Market Overview

The sell‑off in U.S. chip stocks that began on Wednesday extended into Thursday’s pre‑market session, driven by concerns over lofty valuations and the heavy AI‑related spending by technology firms. The broader U.S. equity market finished slightly lower on Wednesday, with the S&P 500 and Nasdaq posting modest declines, while gains in Meta Platforms helped limit the overall drop.

Semiconductor Index and Sector Performance

An index tracking semiconductor companies ended the day 6.3% lower, making chipmakers the biggest drags on both the S&P 500 and Nasdaq. Technology was the leading declining sector within the S&P 500. Micron Technology experienced a sharp intra‑day fall of up to 10.6% on Wednesday, and Applied Materials, Lam Research, Allegro MicroSystems and Intel each slipped more than 9%.

Pre‑market Price Movements (as of 04:42 ET)

  • Micron Technology and Western Digital each fell about 2.1%.
  • Coherent Corp dropped roughly 2%.
  • Marvell Technology shed about 1.8%.
  • AMD, Intel and Microchip Technology each edged down around 1%.

Analyst Commentary

JPMorgan analyst Nikolaos Panigirtzoglou noted that the strong and almost steady outperformance of semiconductor stocks—particularly AI chip and memory makers—relative to hyperscalers since last September “appears somewhat unsustainable in the long run.”

Meta Platforms Divergence

Meta Platforms stood out as an outlier, with its shares rallying 8.8% after Bloomberg reported that the company is contemplating a cloud‑business model to sell excess AI computing capacity. According to Bloomberg, Meta is weighing whether to offer access to AI models hosted on its infrastructure or to sell raw compute power. The company disclosed in April that it intends to spend up to $145 billion on capital expenditures this year to expand data‑center capacity and secure the GPUs required for training large AI models and handling heavy workloads. By commercialising idle capacity, Meta could generate a new revenue stream, addressing investor concerns about its massive spending plan. The prospective cloud offering would place Meta in direct competition with established players such as Amazon, Microsoft, Google and specialist provider CoreWeave.

Upcoming Economic Data

The heightened market volatility arrives ahead of the key U.S. monthly jobs report scheduled for Thursday, with markets set to close on Friday in observance of the Fourth of July holiday.