The semiconductor industry is in the global spotlight in 2024–2025. On one side is explosive growth driven by increased demand for chips for AI, data centers, and automotive electronics. On the other side are sharp declines in the stock market caused by reassessed expectations, regulatory pressure, and an overheated sector. Investors, analysts, and corporate strategists are closely monitoring the events to learn more about the nature of current volatility and avoid future mistakes.
Reasons for the Recent Volatility
Over-Expectations for AI
2023–2024 were marked by AI optimism. Nvidia, AMD, TSMC, ASML and other companies showed record figures. However, in 2025, a reassessment began. It turned out that:
- Not all clients can scale AI workloads;
- Customers are starting to save on infrastructure;
- Competition (especially from China) is intensifying.
The result is short-term corrections of 15–30% for several stocks.
Increase in Rates and Revision of Multipliers
Rate hikes in the US and EU have put pressure on the entire tech sector. For semiconductors, this means:
- Higher cost of borrowing;
- Revision of investment programs;
- Decline in fair P/E valuations.
Geopolitics
- China restricts export of key rare earth elements;
- The US has strengthened export controls on advanced technologies;
- Taiwan (TSMC) is again at risk.
These factors have increased short-term instability even among industry leaders.
Examples of Key Movements
Nvidia (NVDA)
In June 2025, shares fell 22% in the two weeks following the report’s release, despite revenue growth. The reason was weak order forecasts from hyperscaler companies. JP Morgan analysts noted that “expectations are outpacing reality.”
TSMC (TSM)
Shares fell 14% after reports of lower orders from Apple and Qualcomm. News emerged that construction of a new Arizona plant was slowing due to a shortage of specialists and logistical problems.
Intel (INTC)
Despite the strategic focus on the foundry business, the company continues to lose ground. In May-June 2025, shares fluctuated with an amplitude of up to 18% due to problems with the development of the 3-nm process technology.
ASML
The lithography press maker said orders fell amid delays in exports to China and unstable demand from Korea and the United States. The company’s market capitalization fell 19% in the quarter.
Investor and Retail Behavior
a) Rotation into Defensive Assets
Investors have begun shifting money out of semiconductor stocks and into commodity ETFs and bonds. Bloomberg data shows that NVDA and AMD-based funds have seen net outflows of more than $3.2 billion in a month.
b) Strengthening the Role of Algorithmic Trading
High-frequency trading has amplified volatility in the semiconductor sector, with automated systems accounting for 42% of all trades in May and June. This surge in algorithmic activity has intensified short-term price fluctuations and added noise to market signals.
c) Increase in Demand for Derivatives
Options volumes on NVDA, AMD, and INTC stocks have grown by more than 60% compared to the beginning of the year. This indicates a desire to hedge risks and speculate on volatility.
d) Participation of Retail Investors
Platforms like Robinhood and eToro saw record volume in the semiconductor sector, with retailers reacting sharply and impulsively, amplifying price action.
What the Market has Learned
Don’t Overestimate Short-Term AI Trends
Many analysts are now more cautious about the impact of AI on revenues and margins. Goldman Sachs has revised its price targets downwards for a number of companies.
Diversification is Critical
Companies operating in related industries – automotive, industrial automation, energy – have demonstrated greater resilience.
Transparency of Supply Chains
Events have shown how important it is for investors to understand logistics, country-specific dependencies and the availability of diversified suppliers.
The New Reality of Capital Expenditures
The strong growth of CAPEX in 2023-2024 has given way to a correction phase. Many companies are forced to suspend ambitious projects, from factories to research.
New trends and challenges (Second Half of 2025)
Government Subsidies and Protectionism
The US is expanding the CHIPS Act, and the EU is launching similar initiatives. This will support local production but will create a shortage of specialists.
Growing Importance of Mid-Range Solutions
Low- and medium-performance chips for cars, household appliances, and industry are becoming strategically important. China is actively developing this niche.
Deepening Cooperation with Big Tech
Google, Amazon, and Microsoft are starting to invest in their chips (ASIC, TPU), reducing dependence on external suppliers and creating competition.
Pressure on Margins
Rising production, logistics, and personnel costs are reducing operating margins. That is especially true for companies without large-scale integration.
Recommendations for Investors
- Study company reports not only on revenue, but also on the structure of orders, margins, and geography of deliveries.
- Monitor CAPEX programs and capacity utilization.
- Use options and ETFs as volatility hedging tools.
- Continuously learn more about global risks, technology trends, and macroeconomic changes.
Conclusion
The semiconductor sector remains a key indicator of the global technology cycle. In 2024–25, it offers important lessons:
- Cyclicality has not gone away, even amid the hype around AI;
- External factors (interest rates, geopolitics, subsidies) can reset expectations;
- Investor confidence in management, transparency of reporting and strategy becomes decisive.
The market requires mature analysis, flexibility and the ability to react to instability.
