Full Breakdown
Semiconductor Index Plunges, Short Sellers Net $32 B in Week-Long Rout
By Drooid · · How we work
Core Market Collapse
The Philadelphia Semiconductor Index (SOX) fell more than 12% and extended losses to an eighth consecutive session, matching its longest losing streak since 2006. All but ten of the index’s 30 components have dropped over 10% since the sell-off began. The S&P 500 is on track for a 1.7% weekly decline—the worst week since June—while the Nasdaq 100 is projected to lose about 5% this week. Major contributors to the slide include Coherent Corp., down nearly 30%, and Astera Labs, Macom Technology Solutions, and Credo Technology Group, each shedding more than 20% in the eight-day period.
Background: AI-Fueled Rally and Valuation Pressures
Earlier in the year, semiconductor stocks surged as investors chased companies positioned to benefit from “hundreds of billions of dollars” in pledged AI infrastructure spending. The SOX more than doubled from the end of March to a record high in June, adding roughly $6.5 trillion in market value. Analysts now cite higher interest rates, stretched valuations, and the massive scale of AI-related capital expenditures as factors prompting a sharp correction.
Data and Short-Seller Profits
Short sellers have accumulated an estimated $32 billion in gross paper gains over the past seven days, according to data from S3 Partners LLC compiled by Bloomberg. In addition to semiconductor bets, traders shorting CoreWeave Inc.—an AI cloud-computing provider—are on track for more than $1 billion in mark-to-market profits as the stock is set to shed over 20% this week. Credit-default swaps on CoreWeave price in a greater than 50% chance of default within the next five years.
Official Commentary
Outlook
The combination of elevated interest-rate expectations and concerns over AI-related spending continues to weigh on chip valuations. Market participants who positioned against the sector may maintain their short exposure, while investors awaiting clearer guidance on AI capital allocation could influence the next price movement.