A notable selloff in semiconductor stocks has struck the market, as investor concerns about the sustainability of high valuations amid significant AI investments come to the forefront. The semiconductor index fell approximately 4.5%, with major chipmakers such as Intel and AMD experiencing declines. At the same time, oil prices surged due to geopolitical tensions, notably the U.S. revoking a waiver for Iranian oil sales, leading to a 5% increase in WTI crude prices to $71.98 per barrel. This increase in oil prices has contributed to a rise in Treasury yields, with the 10-year yield climbing 7 basis points to 4.54%, fueling inflation fears.
The broader market impact is evident as the Nasdaq 100 dropped by 1.8%, despite a general rise among S&P 500 companies. This market correction in chip stocks and the concurrent rise in yields could have implications for tech valuations, with Alphabet’s position as a leading tech company potentially affected. Currently, prediction markets reflect a 26% probability that Alphabet will be the second-largest company in the world by market cap on July 31, 2026, a notable decrease from 48% a week ago. This shift suggests market participants are recalibrating their expectations in light of recent developments.
