The PHLX Semiconductor Index dropped about 7% over two sessions this week, even after Analog Devices posted record results, as the 30-year Treasury yield surged to its highest level since June 2007. Nasdaq-listed names including AMD, Micron and Nvidia sold off as the bond move pressured stocks priced on distant earnings.
The PHLX Semiconductor Index fell about 5% on Tuesday and another 2% on Wednesday, leaving it roughly 20% below the record it set on June 22. The only company in the index to report results this week, Analog Devices, delivered record numbers and guided to a record fourth quarter, yet the sector slid anyway.
Two ugly sessions for chip stocks
Tuesday's decline pulled the index from 12,621 to 11,992, a drop of about 5%. Advanced Micro Devices fell about 4% on Tuesday and nearly matched that on Wednesday. Micron Technology dropped about 7% on Tuesday. Nvidia lost ground both sessions but held up better than peers, slipping 0.78% to $215.15.
Wednesday's follow-through pushed the index down to 11,738, so the two sessions together erased about 7% of the sector's value. Even after the slide, the index is still up about 66% in 2026 after ending 2025 at 7,083.
Treasury yields, not chip news, drove the selloff
The 30-year Treasury yield topped 5.33% on Tuesday, its highest level since June 2007. The move tracks a widening U.S. fiscal deficit, which hit $432.3 billion in July, the highest monthly total since March 2021, pushing the fiscal year's shortfall toward $1.8 trillion. Inflation remains above the Federal Reserve's 2% target, and rising oil prices have added to the pressure.
However, the fit between yields and chip prices isn't exact. Chip stocks rose Monday even as the 30-year first pushed into 19-year-high territory. Then on Wednesday, the Treasury Department said it would double its debt repurchases and the yield eased to about 5.18% — yet chip stocks fell anyway. As of the report, the 30-year had climbed back above 5.2%.
Richer multiples face the biggest reset
A Treasury bond paying more than 5% with no default risk makes stocks priced on earnings years away less attractive, and the richer the multiple, the bigger the hit. Nvidia trades at about 33 times earnings and about 22 times next year's projected profit, supported by revenue that grew about 71% over the past 12 months. AMD, near $465, costs about 42 times its year-ahead earnings estimate, with far more of its value resting on results still to come. Micron, by contrast, trades at about 21 times earnings but only about 6.5 times expected earnings, since investors already doubt the memory boom's staying power.
Source: The Motley Fool
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