Semiconductor stocks took a hit Friday as investors decided it was time to cash in some of those AI-driven gains. Names like NVIDIA (NVDA), Broadcom (AVGO), Advanced Micro Devices (AMD), Intel (INTC), Marvell Technology (MRVL), Super Micro Computer (SMCI), Micron Technology (MU), and Taiwan Semiconductor (TSM) all traded modestly lower.
The broader chip sector came under pressure after a hotter-than-expected Consumer Price Index reading sent the PHLX Semiconductor Index down more than 3%. It's a classic case of inflation fears hitting the high-growth names that have been on a tear.
Inflation Fears Weigh on High-Growth AI Stocks
U.S. stock futures moved lower as persistent inflation concerns and geopolitical uncertainty following the Trump-Xi summit pressured richly valued technology and semiconductor names tied to artificial intelligence. The sell-off came after months of outsized gains fueled by surging enthusiasm around AI infrastructure, hyperscale data center expansion, and next-generation chip demand.
When inflation runs hot, it tends to hit high-growth stocks hardest—because those future cash flows get discounted more heavily. And after the run chip stocks have had, some profit-taking was probably overdue.
US-China AI Chip Restrictions Stay in Focus
Ongoing U.S.-China tensions surrounding advanced AI chip exports continued to weigh on NVIDIA and other semiconductor companies with exposure to China. The issue returned to focus after NVIDIA CEO Jensen Huang joined President Donald Trump's Beijing delegation, where technology trade and market access remained key discussion points.
Although Trump said he would push for broader access for U.S. companies in China, NVIDIA recently indicated that China-compliant versions of its AI chips still have not received approval for commercial sales in the country. The restrictions have already significantly reduced China's contribution to NVIDIA's revenue.
AI Infrastructure Boom Continues to Support Long-Term Outlook
Despite the short-term pain, the long-term story for chip stocks remains intact. In April, Sid Choraria of SC Marwar Capital said accelerating earnings growth and massive AI infrastructure spending continue to underpin long-term bullishness across semiconductor stocks.
According to Choraria, Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOGL), and Meta Platforms (META) are collectively investing roughly $800 billion in AI data center infrastructure, driving one of the largest technology buildouts in history and fueling sustained demand for AI-related chips. He added that rising corporate profits and expanding operating cash flows continue supporting investor confidence in semiconductor leaders such as NVIDIA and Broadcom, despite increasingly elevated valuations.
So while Friday's sell-off stings, the underlying demand for AI chips isn't going away anytime soon. The question is whether the market can look past near-term inflation fears to the massive spending that's still pouring into the sector.
Price Action
In Friday premarket trading, NVIDIA fell 2.84% to $229.05, Broadcom declined 2.79% to $427.50, Super Micro Computer dropped 3.36% to $31.92, Marvell Technology slid 5.25% to $173.00, and Taiwan Semiconductor Manufacturing lost 3.08% to $404.87, according to market data.
