Chip Stocks Plunge Amid Wider Market Fall, S&P 500, Nasdaq Down

A chip-led selloff dragged US equities lower on July 16, with the S&P 500 off about 0.5%, the Nasdaq-100 down roughly 1.6% and the Dow easing around 0.2% as semiconductor weakness overshadowed an otherwise upbeat start to Q2 earnings season .

The trigger was Taiwan Semiconductor, TSM, which posted strong results but lifted its 2026 capital-expenditure outlook to $60-64 billion from a prior $52-56 billion range, stoking fears about near-term margins and returns across the AI infrastructure buildout . TSM's US-listed shares fell about 2.5% despite the earnings beat, the Philadelphia Semiconductor Index dropped 3.8%, and memory names led the declines, with Western Digital and Seagate down roughly 7.3% each and MU off about 4.8% . NVDA and GOOGL also slid as the AI-valuation reset rippled through the complex.

While semiconductors remain positive year to date, the session underscored how sensitive richly valued AI names have become to any sign that capex is climbing faster than the payoff . Investors will watch whether TSMC's heavier spend is read as a demand signal that ultimately benefits equipment and chip suppliers, or as margin pressure that caps the group's multiple in the near term.

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