Chip Stocks Down 21.3% Since June: The Funds Hit Hardest

The Philadelphia Stock Exchange Semiconductor index fell 21.3% between 23 June and 2 November, while global equities lost just 1.2% over the same period. That gap, drawn from FE Analytics data in US dollars excluding dividends, is the clearest measure yet of how sharply investors have repriced the AI trade.

Trustnet research on the 100 funds with the biggest losses since the chip peak turns up an odd result: Chinese equity funds outnumber technology funds. China accounts for 20 of the 100 hardest-hit portfolios and five of the bottom 25, including Invesco ChiNext 50 UCITS ETF, JSS Equity - All China, Matthews China Innovators, GS China A-Share Equity Portfolio and Allianz China A-Shares Equity.

How bad is the damage?

The picture depends on the starting point. The index is still up more than 60% over 2026 so far, despite the sell-off. The losses concentrate in funds that bought the AI story near its peak.

China's STAR50 index of AI and chip leaders fell 47% since the summer — worse than the Philadelphia benchmark. The AI sell-off compounded existing concerns about China's economic health.

Direct technology vehicles took obvious hits. WisdomTree Quantum Computing UCITS ETF and Neuberger Next Generation Connectivity appear in the bottom 25, with another eight tech, AI and semiconductor funds further down the list.

Why did Korea and emerging markets fall?

Korean equity funds suffered because of market concentration. Samsung Electronics and SK Hynix dominate the Korean market, and both stocks pulled back after a spectacular multi-year run. Barings Korea Trust and JPM Korea Equity, plus four Korea-tracking ETFs, sit among the 100 biggest losers.

Emerging markets have quietly become an AI proxy. Taiwan is now the largest country weight in the MSCI Emerging Markets index, largely because of Taiwan Semiconductor Manufacturing Company. Korea ranks second and China third. Fourteen emerging market funds — including Fidelity Emerging Markets, BlackRock Emerging Markets, Polar Emerging Market Stars and Jupiter Global Emerging Markets — made the bottom 100, though none the bottom 25.

Asia Pacific ex Japan funds followed the same logic. Veritas Asian and IFSL Marlborough Far East Growth appear in the worst 25, with another 16 such funds recording some of the Investment Association's biggest losses.

What triggered the reversal?

The Federal Reserve started to hint that interest rates would have to rise to tackle above-target inflation. Investors then began asking harder questions, Trustnet reports:

• When will AI infrastructure spending start to pay off?
• How is the build-out being financed?
• Are valuations of AI-linked stocks justified?
• Why have some key players reported weak results or guidance?

US chip stocks had reached record highs on massive demand for semiconductor and memory chips to fill datacentres and other AI infrastructure. The questions arrived after the gains, as they usually do.

Which peripheral themes got caught?

Blockchain funds felt the drag. WisdomTree Blockchain UCITS ETF and Invesco CoinShares Global Blockchain UCITS ETF both made the loser list, because many former bitcoin miners now supply datacentres for AI. The crypto vehicles now correlate with the AI narrative more than with cryptocurrency.

Eight funds in a growth, momentum and US small-caps cluster also feature, among them Invesco Global Consumer Trends, WS Blue Whale Growth, iMGP US Small & Mid Company Growth and iShares Edge MSCI USA Momentum Factor UCITS ETF. Growth and momentum investors had bought AI-linked stocks for some time, and US small-caps had benefited from domestic AI infrastructure demand.

Clean energy did not escape either. L&G Battery Value-Chain UCITS ETF, Invesco Solar Energy UCITS ETF, First Trust Nasdaq Clean Edge Green Energy UCITS ETF, WisdomTree Uranium And Nuclear Energy UCITS ETF and WisdomTree Strategic Metals and Rare Earths Miners UCITS ETF all sold off on the prospect of higher rates and reduced power demand from a slower AI build-out.

Many investors still expect the AI revolution to continue. The market has simply started charging them for the assumption.