The semiconductor sector just had its worst day in over six years. US-traded chipmakers shed roughly $1.3 trillion in market value on June 5, as a brutal sell-off tore through the industry and sent shockwaves into crypto, which lost an estimated $130 billion in parallel.
The Philadelphia Semiconductor Index (PHLX SOX) cratered 10.3% in a single session, its steepest drop since the pandemic-era chaos of March 2020. Over two days, the damage extended to around 12%. For a sector that had been riding a 73% year-to-date rally on the back of AI mania, the reversal was swift and merciless.
Who got hit the hardest
Nobody was spared, but some names took significantly more damage than others. Marvell Technology led the bleeding with a 17% decline, followed by Micron Technology at 13% and Advanced Micro Devices at roughly 11%.
Nvidia, the poster child of the AI chip boom, fell nearly 6%. That single-digit percentage sounds modest until you remember the scale involved: over $300 billion in market capitalization, wiped out in one trading session.
Broadcom, which ironically reported numbers that would look spectacular in any other environment, dropped about 8%. The company posted Q2 revenue of $22.19 billion, up 48% year-over-year. Its AI semiconductor revenue surged 143% to $10.8 billion. But Broadcom’s Q3 guidance on custom AI chips fell short of what investors had priced in, triggering a sector-wide reassessment.
Why the floor dropped out
The semiconductor index had climbed 73% year-to-date heading into the sell-off, a rally fueled almost entirely by AI enthusiasm. Stronger-than-expected US jobs data landed on the same day, reigniting fears that the Federal Reserve would keep interest rates elevated for longer. The Nasdaq’s nine-week winning streak ended abruptly.
What this means for crypto investors
The $130 billion crypto market drawdown wasn’t a coincidence. It was a symptom of the same disease: a broad risk-off pivot that punished anything perceived as speculative or growth-oriented.
The Broadcom guidance miss and the jobs data introduce fundamental uncertainty that could keep a lid on sentiment for longer. Rate-sensitive assets, crypto included, may face continued headwinds if the higher-for-longer narrative regains traction.
Investors should watch whether semiconductor earnings guidance from other major players confirms or contradicts Broadcom’s more cautious outlook on custom AI chips. If the disappointment is isolated, the sector could stabilize quickly.
The AI narrative isn’t dead. A sector generating 143% year-over-year revenue growth in its core thesis doesn’t vanish overnight. But the market just served a reminder that even the best stories need reasonable valuations to sustain them, and that when tech sneezes, crypto still catches a cold.