Chip stocks decline: Why Nvidia, AMD, Micron and SK Hynix shares are falling

US chip stocks had a weak start to July, raising fears that the sector could remain volatile in the coming weeks. The Philadelphia Semiconductor Index has fallen more than 11% since reaching a record high in June. Even after the recent fall, the chip index is still up 83% this year, showing how strongly AI demand has pushed the sector higher. Investors are now questioning whether the AI spending boom can continue at the same pace.

Steve Sosnick, chief market analyst at Interactive Brokers, said chip companies have seen record earnings growth, but investors are now asking how long such strong growth can last, according to Reuters.