On May 12, 2026, semiconductor stocks experienced a sharp selloff, pulling back from record highs driven by the artificial intelligence trade that had recently expanded beyond Nvidia [1]. Qualcomm shares plummeted 13%, marking their worst session since 2020, while Intel dropped 8%. On Semiconductor and Skyworks Solutions each declined more than 6%, and Micron Technology fell 6%. Sandisk tumbled 8%, though its shares have climbed more than sixfold since the start of the year [1]. The iShares Semiconductor ETF, which tracks the sector, sank 5% [1].
The downturn followed a hotter-than-expected reading of a key consumer inflation measure, with rising oil prices due to the war in Iran prompting investors to adopt a risk-off stance [1]. Despite the selloff, the recent rally had broadened the AI trade, with skyrocketing demand for central processing units and graphics processing units that support large language models boosting chip stocks to record levels [1]. Memory chip makers, including Micron and Sandisk, have been hiking prices amid an ongoing supply shortage [1].
Formfactor's CEO indicated that key indicators show semiconductor demand will continue, highlighting underlying sector strength despite the current selloff [1]. Wall Street analysts note a 'changing of the guard in AI,' as Intel and AMD shares have soared while Nvidia lags, reflecting shifting investor sentiment and bets on the next wave of AI technology leadership [1].
Market participants are closely monitoring price levels and technical indicators for support. The sector's sharp pullback is viewed as a response to macroeconomic pressures, but ongoing demand for AI-related chips and components is expected to provide longer-term support for semiconductor stocks [1].
CONCLUSION
Semiconductor stocks suffered significant declines amid inflation concerns and geopolitical tensions, but underlying demand for AI-related chips remains strong. Analysts and industry leaders expect continued sector strength, with shifting leadership among chipmakers. Despite short-term volatility, longer-term prospects for semiconductor stocks are viewed as positive.