A group of stocks focused on making computer chips fell hard in July 2026. The PHLX semiconductor index, which tracks major chip companies, dropped 18.2% by mid-July, according to LSEG data. At least 19 mostly tech stocks fell 25% or more during the month. Micron Technology, one of the biggest chipmakers, was down 26.5%. By July 28, the Nasdaq Composite — a stock index heavy in technology companies — was close to what investors call a "correction," meaning a drop of 10% from its recent high. It closed at 24,876.91 after a small 0.22% decline that day. (Barron's; Reuters)

The selling got worse through the second half of the month. On July 16, the S&P 500 technology sector fell 1.8%, and semiconductor stocks dropped 4.3% (Reuters). The Nasdaq had briefly steadied in early June. A June 9 rebound in technology shares faded, sending both the S&P 500 and Nasdaq lower (Reuters). By July 27, the Nasdaq closed at 24,932.08, down 0.18%, but was still up 63% for the year (Reuters).

Professional investors disagree about what to do. Fundstrat's Tom Lee, cited in a MarketWatch article updated July 8, urged investors to buy semiconductor stocks at lower prices. Two major Wall Street banks were split on whether the selloff was a chance to buy cheap, per a July 20 MarketWatch report.

Everyday investors are doing the opposite. Individual investors were selling stocks at the fastest pace since the COVID crash as of July 29, according to MarketWatch, instead of buying at lower prices. That gap — professionals saying "buy" while regular investors are the ones selling and creating those lower prices — is the tension at the heart of this selloff.

The bigger picture is worth pausing on. The Nasdaq was still up 63% for the year even after this drop, which means it started this decline from a very high level. A 10% fall from a peak in that situation is more like a stumble in a long winning streak than a full reversal. But the damage is mostly in chip stocks — the 18.2% monthly drop in the semiconductor index suggests the selling is focused on that sector, not spreading across the whole market.

The retail selling is the more telling detail. When individual investors pull money out this fast, it usually means they are giving up — which some professionals see as a sign that the worst of the decline may be near. The two-bank split reported by MarketWatch on July 20 shows the debate: one side sees a chance to buy cheap; the other sees real problems that justify the price drops.

For anyone watching chip stocks, three things matter: whether the semiconductor index stops falling or keeps dropping, whether everyday investors start buying again or keep selling, and whether upcoming earnings reports from major chip companies back up the case that the bears are building. The Nasdaq's small moves on July 27 and July 28 — declines of 0.18% and 0.22% — suggest the selling may be slowing at the index level, but that calm can hide continued trouble underneath. Chip stock moves will tell you more about the health of this selloff than the Nasdaq's headline number will.

What is known: a sector that led the market higher has fallen sharply in one month, everyday investors are leaving at COVID-crash speed, and professionals disagree on what it means. What is not known is whether the case for high chip stock prices has actually changed, or whether this is a temporary panic that reverses when the selling runs out. That gap is where the risk sits.