Intel Corporation [NASDAQ: INTC] fell 10% on Tuesday, May 12, changing hands near $116 after closing at $129.44 the previous session, while Advanced Micro Devices [NASDAQ: AMD] dropped approximately 5% to around $436, as the semiconductor sector’s extraordinary 2026 rally ran into a wave of profit-taking triggered by a hotter-than-expected inflation print and broad risk-off positioning.

The selloff arrived after both stocks had just completed a parabolic week, with Intel gaining 35% and AMD adding 34% in the five sessions ending May 11, a pace of appreciation that makes Tuesday’s consolidation look less like a thesis break and more like the kind of exhale that almost always follows a 30%-plus week in any single name.

Intel’s decline is the bigger story in magnitude terms given the scale of the year-to-date move: the stock is up 218% in 2026 and has returned 429% over the past 12 months, making it the most dramatic single-stock comeback narrative in the AI cycle, driven by a combination of Elon Musk’s Terafab project selecting Intel’s upcoming 14A process for a major US chip buildout and the speculative momentum around a potential Apple chip manufacturing partnership.

Bank of America raised its Intel price target from $56 to $96 this week but maintained an Underperform rating, explicitly warning that much of the speculative upside was already priced into the stock, a cautious framing that contributed to the selling pressure as the gap between price and fundamental conviction widened.

AMD’s pullback looks more like sector-wide contagion than a company-specific story, given that the underlying business remains in excellent shape, with Q1 2026 revenue of $10.25 billion beating estimates, data centre revenue up 57% year-on-year, and CEO Lisa Su projecting a structural shift in CPU-to-GPU ratios for AI data centres from 1:8 toward 1:1, a thesis that positions AMD as a primary beneficiary of the next wave of agentic AI infrastructure buildout.

Reddit composite sentiment on AMD collapsed from 73 to 47 between 6 a.m. and 9 a.m. ET on Tuesday, with upvote activity velocity dropping 95% from the prior week’s peak, confirming that the selling was driven by retail exhaustion and short-term positioning rather than any deterioration in the fundamental investment case.

Nvidia [NASDAQ: NVDA] was the notable exception in the sector, closing up 0.6% at $220.78 as capital appeared to rotate back toward the dominant AI chip name following a period in which investors had been actively rotating out of Nvidia into Intel, AMD, and Micron Technology [NASDAQ: MU] as part of what CNBC characterised as a “changing of the guard in AI.”

The iShares Semiconductor ETF, which tracks the Philadelphia Semiconductor Index and is up 77% year to date through May 11, fell 3.2% intraday on Tuesday, while the broader chip complex including Applied Materials [NASDAQ: AMAT], Lam Research [NASDAQ: LRCX], and ASML Holding [NASDAQ: ASML] all declined between 5% and 6%.

The structural thesis underpinning the sector has not changed, with GF Securities still projecting the server CPU market to grow from $26 billion in 2025 to $135 billion by 2030 at a 38% compound annual growth rate, Intel’s Terafab deal intact, and AMD’s six-gigawatt commitment from Meta on track for second-half deployment, suggesting Tuesday’s selloff is a consolidation of gains rather than a signal that the chip cycle is rolling over.

Related Posts: