Semiconductor stocks are getting hammered over AI valuation doubts, and crypto markets aren't escaping the blast radius
Nasdaq 100 futures dropped roughly 2% on July 17 as a brutal selloff in semiconductor stocks picked up momentum. Bitcoin fell about 2% to $62,790.91, reinforcing the increasingly tight correlation between risk-on tech bets and digital assets.
The chip carnage, by the numbers #
The damage across the semiconductor sector has been sweeping. Micron’s stock declined between 4.7% and 8% over recent sessions. Sandisk shares dropped around 7.3%. SK Hynix, the South Korean memory chip giant, experienced double-digit percentage declines during Asian trading hours.
The PHLX Semiconductor Index, the benchmark tracker for the chip sector known by its ticker .SOX, had already fallen 4.65% on July 7. That single-day drop trimmed its year-to-date gains to roughly 74%.
Samsung’s situation is perhaps the most telling. The company reported a record profit, the kind of headline that would normally send shares climbing. Instead, the market basically shrugged. Record earnings couldn’t outrun the narrative that the entire AI hardware trade might be overcooked.
Why AI doubt is the real culprit #
For the better part of two years, the semiconductor rally has been fueled by one core thesis: AI needs chips, lots of them, and the companies making those chips deserve enormous premiums. Data center buildouts, large language model training, inference workloads — all of it pointed toward insatiable demand for high-bandwidth memory, GPUs, and advanced packaging. The selloff traces directly back to doubts about AI data center valuations. The semiconductor sector’s recent earnings have been decidedly imperfect, even when they’ve technically been strong. Earlier dips in June and July had already set the stage, with Nasdaq experiencing declines in the 1-2% range during those periods. What’s different now is the breadth of the selling across memory chips, storage, and fabrication.
Bitcoin and the Nasdaq, still joined at the hip #
Bitcoin’s 2% decline on the same day Nasdaq futures cratered wasn’t a coincidence. At $62,790.91, Bitcoin sits well below its highs but not at levels that suggest outright panic. Many of the same portfolio managers and algorithmic strategies hold both tech equities and Bitcoin — when they de-risk, they de-risk everything.
When semiconductor stocks fall, margin calls can force selling across other asset classes. Traders reassessing risk exposure in their tech portfolios often reduce positions in crypto simultaneously, not because they’ve changed their view on Bitcoin, but because they need cash.
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