By Jared Blikre

Semiconductor stocks cracked again on Tuesday, extending Friday's rout as sellers went back to dumping the market's biggest winners from the spring rally.

Then came a blistering late-day rally. The Philadelphia Semiconductor Index (^SOX) had been down nearly 9% at the lows before roaring back to finish down just 1.9%.

That rebound softened the close, but it did not erase the damage underneath the surface. By 1:00 p.m. ET, the chip index had suffered its steepest drop from the open since July 2002.

That made Tuesday less of a broad-market washout than another hit to the AI trade's leadership. In fact, the S&P 500 (^GSPC) had more advancers than decliners by early afternoon, with 356 stocks higher and 146 lower.

The pain was concentrated in the area where the rally had been strongest.

The 50 worst S&P 500 stocks since June 2 had posted a median gain of 36% from March 30 to June 2, according to Yahoo Finance analysis. The rest of the index had gained just 3% over the same two-month stretch.

Read more: How to protect your portfolio from an AI bubble

The 50 worst S&P 500 names had a median gain of 44% from March 30 to June 2 versus 3% for the rest. Yahoo Finance analysis

Since June 2, that former leadership bucket has been down a median 9.3%, while the rest of the S&P 500 is still up 2.0%.

The worst-hit bucket was heavy with AI and chip-linked names. Supermicro (SMCI) and Broadcom (AVGO) were both down about 20% from June 2, while Qualcomm (QCOM) had dropped about 17%.

The market-cap damage was even more concentrated.

Broadcom and Nvidia (NVDA) were the two biggest S&P 500 market-cap losers since June 2, with Micron and AMD (AMD) also among the top 10. The semiconductor bucket had erased roughly $1.4 trillion in market value over the five-day sell-off, according to Yahoo Finance analysis.

Broadcom and Nvidia led the S&P 500 market-cap losses since June 2, with Micron and AMD also in the top 10. Yahoo Finance analysis

Tuesday's midday rebound will matter if it holds into the close — but chip sellers remain in control until the SOX closes over 13,000 once again.

The message from the tape remains the same for now: AI winners are no longer getting a free pass.

Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.

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