Chip Stocks Rebound After Their Worst Week Since April 2025 as Wall Street Debates the Dip

After the worst stretch for semiconductor stocks in over a year, the rebound arrived. US chip shares rose Monday, July 20 — the sector's first gain since the slide began — and the recovery broadened across Asia on Tuesday, with the MSCI Asia Pacific Index up 1.7% and Korean and Taiwanese benchmarks gaining more than 2.5%, led by Samsung and TSMC.

How bad the week was

The Philadelphia Semiconductor Index dropped 10% in the week through Friday, July 17 — its steepest weekly decline since the April 2025 tariff shock — and entered bear-market territory, down 20% over four weeks. The VanEck Semiconductor ETF fell 8.9%. Across the July slide, more than $1 trillion in chip market capitalization was erased. Nvidia, notably, was the relative safe haven: down only about 2.2% Friday and roughly 4% on the month, it 'held the line' while peers cratered — then led Tuesday's premarket gains on news of its disclosed Nebius stake.

What triggered it

The catalyst was Chinese: Moonshot AI's Kimi K3, a 2.8-trillion-parameter model released July 16 that topped LMArena's Frontend Code Arena — beating US flagships on that board — with open weights promised by July 27. Combined with a record hedge-fund retreat from tech and jitters over custom silicon, it revived the question investors keep circling: what exactly is roughly $725 billion in expected 2026 hyperscaler capex buying if open models keep closing the gap?

The buy-the-dip camp

By Monday, the street had picked sides. Morgan Stanley, Mizuho and JPMorgan called the selloff a "compelling entry point," arguing AI demand signals — from TSMC's guidance to hyperscaler commitments — remain intact. Evercore dissented, warning another 10-15% of downside is possible if the open-weight narrative keeps compressing US software and model margins.

What settles it

DeepSeek's V4 general release is expected within days, and Kimi K3's weights land July 27. If those releases confirm frontier-level open models at Chinese-API prices, the capex debate returns with force — earnings season, starting with the hyperscalers next week, will meet it head-on.