Soaring chip stocks suffer heavy losses as the Philadelphia Semiconductor Index plunges 6% at one point, but momentum correction is unlikely to disrupt the "AI bull market narrative".

For some of the top-performing leaders in the chip industry this year—especially those who have staged a spectacular rebound since April after plummeting due to the Middle East geopolitical conflict—this definitely marks a dramatic reversal. With inflation data exceeding expectations, increasingly pronounced disagreements between the US and Iran over restarting negotiations, and momentum trading indicators reaching extreme levels that have historically signaled sharp short-term sell-offs, the chip stocks that have soared recently experienced a rare single-day plunge on Tuesday.