Nasdaq Composite Falls Back: Semiconductors Sell-off as SpaceX Added to NDX

The Nasdaq Composite fell 1.45% to 25,742, while the broader Nasdaq-100 bore the brunt of selling pressure on the day Space Exploration Technologies Corp. officially joined the index.

The Nasdaq-100 tumbled 2.18% to 29,049 on Wednesday as SpaceX’s fast-tracked addition to the benchmark index coincided with a brutal selloff in semiconductor stocks, erasing gains from what had been a record-breaking second quarter for technology shares.

Today’s Big Nasdaq Movers: The Good, Bad, and The Ugly

Semiconductor stocks led the decline, with Applied Materials plunging 9.52% to $557.80, Lam Research dropping 8.87% to $330.20, and AMD sliding 8.29% to $522.00.

Some of the memory chipmakers fared even worse, with Sandisk collapsing 11.87% to $1,638.88 and Western Digital falling 10.04% to $549.64. Intel declined 10.10% to $116.42, while testing equipment manufacturer Teradyne shed 12.12% to $360.99. The emerging AI infrastructure player Astera Labs posted the session’s steepest loss into the afternoon, down 12.98% to $416.00.

Against this backdrop, a disparate group of previously beaten-down stocks rallied.

Thomson Reuters gained 5.41% to $93.26, Workday advanced 4.76% to $145.81, and enterprise software stalwarts Intuit and Adobe rose 3.35% and 3.37% respectively. The divergence underscored a sharp rotation away from high-beta artificial intelligence plays toward those which have been overlooked and sold down over the past year.

SpaceX Index Entry Creates Technical Headwinds

SpaceX’s inclusion in the Nasdaq-100 followed Nasdaq’s announcement on June 26 that the aerospace and AI conglomerate would join the benchmark just 15 trading days after its June 12 initial public offering, the largest in history at approximately $75 billion. The expedited timeline leveraged Nasdaq’s new fast-track eligibility framework designed for mega-cap IPOs. At a valuation exceeding $1.7 trillion, SpaceX immediately became one of the index’s largest constituents, forcing passive index funds managing an estimated $700 billion in assets to rebalance their holdings.

The mechanical buying of SpaceX shares by exchange-traded funds such as the Invesco QQQ Trust necessitated offsetting sales of existing constituents to maintain index weighting constraints. This technical pressure compounded fundamental concerns about valuation and concentration risk in an already growth-heavy benchmark. SpaceX had previously been added to major FTSE Russell indices, meaning some passive inflows had already occurred, but the Nasdaq-100 inclusion represented the largest single forced-buying event for the stock.

Market strategists noted that the fast-track rule, while designed to keep the index current with emerging leaders in space and artificial intelligence, introduced new volatility dynamics. The compressed timeline between IPO and inclusion left less room for price discovery and increased the risk of air-pocket moves around index dates.

Semiconductor Unwind

The sharp decline in chip stocks extended a selloff that began in early July, when the Philadelphia Semiconductor Index dropped approximately 6.5% at the start of the third quarter. Today’s losses in names such as KLA, which fell 8.48% to $223.79, and Marvell Technology, down 9.80% to $237.44, reflected growing market concern that artificial intelligence infrastructure spending may be reaching unsustainable levels, yet it is worth noting that the selling is taking place from largely record highs.

Micron Technology, a bellwether for memory demand, declined 7.23% to $935.51, while storage specialist Seagate Technology dropped 7.50% to $837.48. The synchronized selling across memory, logic, and equipment manufacturers suggested markets were reassessing three critical assumptions: the pace of AI data center buildouts, the sustainability of current profit margins, and whether recent valuation multiples had raced too far ahead of near-term fundamentals.

Rocket Lab, which operates in the adjacent space launch market, fell 9.70% to $90.62, potentially caught in crosscurrents between enthusiasm for the space economy and concerns about competition from SpaceX’s dominant market position.

Rotation Into Laggards

While semiconductor stocks fell back, a cohort of steady-earnings technology and communication services names attracted buying interest. Telecommunications provider T-Mobile US gained 3.70% to $189.90, payroll processors Paychex and Automatic Data Processing rose 3.82% and 3.51% respectively, and pharmaceutical company Gilead Sciences advanced 4.40% to $135.72.

The outperformance of these lower-beta names, many of which had significantly underperformed during the first half of 2026, pointed to a risk-reduction trade rather than wholesale equity liquidation. Enterprise software companies also participated in the rotation, with DoorDash climbing 3.36% to $199.00 and public safety technology provider Axon Enterprise adding 3.24% to $664.84.

The divergence in performance highlighted the extreme crowding that had developed in artificial intelligence and semiconductor positions during the second quarter. As those trades unwound, capital sought refuge in businesses with more predictable subscription revenue streams and less exposure to cyclical capital expenditure trends.

Momentum Reverses, For Now

The semiconductor selloff arrived after a parabolic second-quarter rally that had pushed many chip stocks to record highs. Applied Materials, for instance, had gained 86.79% year-to-date before today’s decline, while Lam Research was up 79.12% and KLA had advanced 75.49%. These gains reflected optimism about multi-year artificial intelligence infrastructure spending, but also created vulnerability to any shift in sentiment or positioning.

SpaceX’s valuation also drew scrutiny. While multiple bulge-bracket banks initiated coverage with buy ratings and highlighted long-term growth opportunities in launch services, the Starlink satellite internet constellation, and AI computing infrastructure, questions persisted about whether a $1.7 trillion to $2.0 trillion valuation was justified for a company with uncertain margins and massive capital expenditure requirements.

The near-term outlook for the Nasdaq-100 hinges on whether the current selloff represents a healthy correction after an extended rally or the beginning of a more significant derating of growth stocks. Upcoming earnings will be critical in determining whether AI infrastructure spending remains robust enough to support current valuations, with the reaction today coming hot on the heels of Samsung Electronics‘ print.

The breadth of today’s decline in high-momentum technology stocks, set against modest gains in defensive names, suggests markets are in the midst of a positioning adjustment rather than a fundamental reassessment of the technology sector’s long-term prospects. Whether this evolves into a sustained rotation or merely a brief pause in the AI-driven rally will depend on upcoming economic data, corporate earnings, and the trajectory of artificial intelligence infrastructure investment in the months ahead.