Semiconductor stocks fall 5% as investors shift focus from AI demand to margins

16 July 2026

NEW YORK, July 16, 2026, 2:20 p.m. EDT. Semiconductor shares dropped 5% as investors looked past AI demand to focus on margins.

The PHLX Semiconductor Index (INDEXNASDAQ:SOX) dropped 5.0% to 11,780.39.
Taiwan Semiconductor Manufacturing Co. NYSE:TSM forecast 12.4% sequential revenue growth, but a 3.3-point lower operating-margin midpoint.
TSMC raised its 2026 capital spending midpoint by 14.8%, increasing pressure on near-term cash returns.

U.S. chip stocks fell Thursday, even as TSMC raised its outlook. The sector index dropped nearly 5% in afternoon trading.

The selloff signals a tougher investor test. Demand is still rising, but new capacity is weighing on expected margins and cash returns.

TSMC’s third-quarter revenue midpoint is $45.2 billion, up 12.4% from the previous quarter. Its operating-margin midpoint is 57%, down 3.3 percentage points. That gap is the day’s clearest signal.

The U.S. market stayed open. All prices below were intraday.

Asset	Price or level	Day move
PHLX Semiconductor Index (INDEXNASDAQ:SOX)	11,780.39	-5.0%
Taiwan Semiconductor Manufacturing Co. NYSE:TSM	$404.21	-3.6%
ASML Holding NV NASDAQ:ASML	$1,792.41	-1.3%
Nvidia Corp. NASDAQ:NVDA	$206.63	-2.8%
Advanced Micro Devices Inc. NASDAQ:AMD	$493.58	-6.7%
Marvell Technology Inc. NASDAQ:MRVL	$186.89	-9.4%

Index data were current at about 2:20 p.m. EDT. Company quotes were at about 2:04 p.m. EDT.

TSMC earned NT$706.56 billion, about $22 billion, in the second quarter. Profit rose 77.4% and topped the pre-report LSEG SmartEstimate by 11.7%. Dollar revenue rose 33.7%.

The company raised its 2026 revenue-growth outlook to slightly above 40%. Its earlier forecast was for growth above 30%. Planned capital spending increased to between $60 billion and $64 billion.

“The AI trade isn’t being priced on growth anymore. It’s being priced on perfection,” said Gene Goldman, Cetera’s chief investment officer. He called Thursday’s move a market pause. Reuters

TSMC finance chief Wendell Huang cited “continued strong demand” and a steep two-nanometer ramp. Advanced nodes made up 77% of second-quarter wafer revenue. pr.tsmc.com

Upstream demand also remains strong. ASML raised its 2026 sales range to €43 billion to €45 billion on Wednesday. The midpoint was about 16% higher than its prior range.

ASML plans to increase low-NA extreme-ultraviolet capacity by 30% in 2027. It is considering another 30% increase for 2028. Its U.S. shares still slipped Thursday.

AMD and Marvell lagged the sector index. Nvidia fell 2.8%. The breadth suggests investors are separating demand evidence from near-term stock upside.

Earlier Thursday, the index was up 67.4% for 2026. Its later level was 19.6% below the 52-week high. Strong fundamentals meet a crowded starting point.

The next test is utilization. New fabs must fill quickly for margins to recover. Chip designers need customer budgets to keep up.

Risks: Intraday prices can reverse before the close. Faster utilization could restore margins sooner. Delays or weaker AI budgets would increase the pressure.

Leokadia Głogulska Latest posts

Leokadia Głogulska is a financial and technology journalist at TS2.tech. Her coverage ranges from stocks and artificial intelligence to space technology and developments across global markets. She graduated from Wrocław University of Economics and Business and worked in financial analysis before becoming a business journalist.

View all