Key Highlights

● Chip and AI stocks reportedly lost over $1 trillion in value during the week.

● All 30 PHLX Semiconductor Index members fell, and chipmakers posted an eighth straight decline.

● In a 45-stock software basket, 41 names fell, erasing roughly $130 billion.

● TSMC reported third-quarter revenue of $46.72 billion, above guidance.

A trillion-dollar week

The scale of the week's selling in AI-linked equities was striking. A published report said the rotation erased more than $1 trillion from semiconductor and AI-related stocks over the week. The losses culminated on Friday, when the Nasdaq Composite sank 572.99 points to 26,140.03 and posted its worst week since the period ended June 26, market data showed.

The S&P 500 slid 84.62 points on Friday to 7,659.44, its biggest weekly drop since June, while the Dow Jones Industrial Average slipped 175.28 points to 52,002.41 and still rose for the week.

Where the value went

Much of the loss came from the largest chip companies. All 30 members of the PHLX Semiconductor Index fell on Friday, and the index closed at 11,137.29. Market reports said chipmakers posted an eighth straight decline, though sources differed on how rare such a streak is historically.

Advanced Micro Devices (NASDAQ:AMD), Arm Holdings (NASDAQ:ARM), Intel (NASDAQ:INTC), Marvell Technology (NASDAQ:MRVL) and KLA (NASDAQ:KLAC) all fell sharply on Friday. Broadcom (NASDAQ:AVGO) fell as well. Nvidia (NASDAQ:NVDA) wobbled amid mixed reports on its close.

Memory makers were among the weakest over the week on concerns about Chinese competitor CXMT's DRAM progress. Market data showed sizable weekly pullbacks at SK Hynix, Sandisk (NASDAQ:SNDK) and Micron Technology (NASDAQ:MU). Seagate Technology (NASDAQ:STX) and Western Digital (NASDAQ:WDC) tumbled on Friday.

Software and platforms piled on

Software added its own losses. Market data showed that in a 45-stock software basket, 41 names fell on Friday, erasing roughly $130 billion. Palantir Technologies (NASDAQ:PLTR) tumbled into correction territory, erasing about $34 billion to $35 billion in value, according to market reports. Snowflake (NYSE:SNOW), ServiceNow (NYSE:NOW), Datadog (NASDAQ:DDOG) and Fortinet (NASDAQ:FTNT) slid.

Meta Platforms (NASDAQ:META) fell amid concern about debt-funded AI spending, and Alphabet (NASDAQ:GOOGL) declined on data-center borrowing worries.

The financing trigger

The common thread was a change in how investors think about AI. A published report said the market moved from asking what AI can do to how it will be financed. CoreWeave (NASDAQ:CRWV) plunged to $61.39 on Friday amid concern about debt of more than $50 billion, and a published report said the cost to insure its debt hit a record.

One market commentator said: "The AI group is now splitting between companies that can fund the buildout themselves and those that have to borrow." Goldman Sachs described hedge funds' selling as a "tactical rotation" away from smaller AI names, according to a published report.

Where the money went instead

The cash moved elsewhere rather than leaving the market. Energy, utilities, consumer staples, health care, financials and materials attracted buyers, according to market data. Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) rose as Brent climbed to $109.86, and Visa (NYSE:V) and Mastercard (NYSE:MA) set intraday records.

Not everyone sees lasting damage. BofA analysts said the risk is "priced in," and BofA's software analyst said of CoreWeave: "This is not about fundamentals."

Chip Earnings Test Spending Plans

The Federal Reserve decides on rates Oct 28. Next week's earnings will show whether spending plans hold. Meta reports Wednesday, Oct 21, alongside Tesla (NASDAQ:TSLA), Lam Research (NASDAQ:LRCX) and Texas Instruments (NASDAQ:TXN), and Western Digital follows Thursday. TSMC (NYSE:TSM), a bellwether for AI chip demand, reported third-quarter revenue of $46.72 billion, above guidance, and kept 2026 capital spending at $60 billion to $64 billion.