US chip stocks slump 36% from June peak, mirroring COVID-era crash as Kadoa tracks sell-off

A recent analysis by Kadoa places the current AI-related market decline in historical perspective, noting that the broader S&P 500 index has experienced only a mild correction at 6% below its peak.reported In contrast, technology-heavy indices have suffered sharper losses, with the Nasdaq down 11% and US chip stocks dropping 36% from their 22 June record high.The recent drop in tech stocks is much sharper than the general market decline, with chip shares falling as much as they did during the pandemic.

The evidence

Kadoa’s data indicates that the 36% fall in US chip stocks, measured via the PHLX Semiconductor index, is as deep as the 35% decline seen during the COVID period.reported The report notes that the S&P 500’s 6% drop is relatively modest compared to past crashes, with four in five historical falls of that magnitude never reaching a 20% loss.reported The analysis covers data from 1928 onwards, showing that eight of the sixteen falls past 15% are depicted in their historical charts.

The decision

For investors, the distinction between broad market indices and sector-specific performance is critical. While the S&P 500 appears stable, the tech sector, now comprising about a third of the index, is driving more volatility than in previous decades.

What to make of it

Historical recovery timelines suggest varying degrees of pain for different asset classes. After the dot-com bubble, the S&P 500 took seven years to recover its price record, whereas chip stocks required 18 years. These figures represent worst-case scenarios for buyers at the peak, as dividend reinvestment typically shortens recovery periods. The current data points to a scenario where tech investors may face longer horizons than general market participants.

In practice

Startup founders monitoring valuation multiples should note that the tech sector is underperforming the broader market significantly. Kadoa’s daily updates provide a mechanism to track whether this is a transient correction or a deeper structural shift. Limitations include the fact that price indices exclude dividends, which could mask some underlying value retention in established semiconductor firms.