Disappointing guidance from memory-chip maker Micron Technology spurred selling among semiconductor stocks on Thursday.
The Philadelphia semiconductor index, known as SOX, dropped 0.6% on the stock market today. The SOX includes the 30 largest semiconductor stocks traded in the U.S.
Micron stock was the day's big loser, falling 7.1% to close at 132.23.
Late Wednesday, Micron reported better-than-expected fiscal third-quarter results. However, its guidance for the current quarter was just in line with estimates. Micron's outlook was not enough to sustain the stock's frothy valuation, Mizuho Securities trading desk analyst Jordan Klein said in a client note.
Rotation Out Of Semiconductor Stocks
As a result, money rotated out of chip stocks and into software and internet shares, Klein said.
Investors interpreted Micron's report as a "direct read" on spending in artificial intelligence chips and hardware, he said. AI chipmakers Nvidia and Broadcom fell on Thursday.
Nvidia stock dropped 1.9% to close at 123.99. Broadcom retreated 0.3% to 1,586.66.
However, not all semiconductor stocks were negatively impacted by Micron's report.
Advanced Micro Devices climbed 1.2% to 159.47. Chip designer Arm Holdings advanced 1.3% to 166.93.
Chip foundry Taiwan Semiconductor Manufacturing was up most of the day but ended the session down 0.3% to 171.63.
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