The Philadelphia Stock Exchange Semiconductor Index sank 10% last week, its worst stretch since April 2025, and the vibe shift arrived exactly where you’d expect: at the seam where AI capex meets the earnings calendar. Alphabet, Microsoft, Meta, and Amazon report by July 30, collectively on the hook for roughly $725 billion in AI spending that a month ago the market was treating as self-justifying.

It isn’t anymore. The S&P 500 slid 1.6% on the week; the Nasdaq 100 lost 4.1%; information technology was the index’s worst-performing group.

The proximate trigger was TSMC’s Thursday print. Profit and revenue beat, but capex guidance came in higher than previously flagged, and the read-through was immediate. TSMC closed down more than 3% Friday. Nvidia fell 2.2%. In Asia, SoftBank dropped 9.2%, Advantest slid 9.4%, Tokyo Electron lost 9%. In Europe, ASML fell 3.8%, ASMI 4.6%, STMicroelectronics 5%, Infineon 4.2%. When the foundry that makes the picks and shovels tells you it needs to spend more to keep up, and the market punishes everyone in the supply chain rather than rewarding them, you’re no longer in a growth story. You’re in a capital-intensity story.

Sentiment was already softening. Samsung’s early-July earnings miss knocked its stock 8%, even as its quarterly profit beat both Nvidia’s and Apple’s. Days later, China’s Moonshot released a new model the company claims performs on par with leading systems from OpenAI and Anthropic, another data point suggesting frontier capability is diffusing faster than the pricing power narrative assumes.

Analysts told ABC News the selloff mostly reflects profit-taking after a prolonged run: Micron is up 197% year-to-date, Sandisk up 471%. They also cited jitters over AI investment returns and a possible rate hike later this year. Fortune’s read is blunter, that investors now regard the AI chip business as mostly overbought.

The 2000 telecom buildout produced real fiber and real bankruptcies in the same decade. Big Tech’s next earnings calls are being graded against that memory, whether management wants to acknowledge it or not.

Sources