Chip Stocks Rebound Ahead of Micron Earnings Test

Investors face a direct test of whether AI-driven gains in semiconductor stocks rest on durable demand or stretched valuations. A selloff that erased more than $1 trillion from the Nasdaq 100 on Tuesday gave way to partial recovery on Wednesday, with futures pointing higher and memory-chip names climbing in premarket trading.

The Nasdaq Composite dropped 2.2 percent on Tuesday while the Philadelphia Semiconductor Index fell sharply, led by losses exceeding 5 percent at Intel, Advanced Micro Devices and Qualcomm. Micron Technology fell 13 percent that session, its steepest decline since early June. South Korean chipmakers Samsung Electronics and SK Hynix each lost more than 12 percent before the Kospi index itself dropped 10 percent.

Wednesday brought measured stabilization. Micron shares rose nearly 3 percent in premarket action, Samsung Electronics gained more than 6 percent and the Kospi recovered over 3 percent. Wedbush analyst Dan Ives cited recent channel checks showing continued enterprise AI demand and described the prior drop as a pause after the Kospi’s near-100 percent advance this year rather than evidence of weakening fundamentals.

Attention now centers on Micron’s fiscal third-quarter results due after the close. The company’s market value has expanded rapidly over the past year amid AI infrastructure spending, yet traders note that the stock has declined after six of its last eight earnings releases even when results beat expectations. Jay Woods of Freedom Capital Markets said investors anticipate a strong quarter but do not expect the shares to resume their prior climb.

Broader questions remain unresolved. Large hyperscale capital expenditures continue to support revenue forecasts for memory and logic chips, yet only 26 percent of U.S. executives surveyed by KPMG in May reported full visibility into AI operating costs. At the same time, rental prices for some forms of AI compute have declined while frontier-model usage remains expensive. Michael Field of Morningstar noted that markets are watching whether Tuesday’s moves trigger further selling or simply mark a brief consolidation.

Federal Reserve policy adds another variable. Traders have increased bets on a second rate increase by year-end following comments from new chair Kevin Warsh, and the Personal Consumption Expenditures index due Thursday will provide fresh data. European defense stocks also fell on separate reports of canceled German naval contracts, though those moves remained outside the main technology narrative.