Semiconductor Market Correction Hits Tech Giants as Gold Prices Rise

The semiconductor market is undergoing a correction after experiencing a spectacular boom over the past three months. The sector's fundamental strength and forecasts of a trillion-dollar business by the end of the decade have driven prices up, with average increases of 40%. However, recent trade conflicts between the US, EU, and China, as well as early signs of a recession, are causing major institutional investors to take profits.

Advanced Micro Devices (AMD) has lost a quarter of its market value ahead of its upcoming quarterly earnings report on August 4. Its share price slipped from USD 585 to USD 445 in just two weeks. The current P/E ratio of 75 reflects extremely ambitious growth expectations, making it unlikely for the market to forgive any margin weakness.

SanDisk is also experiencing a share price plunge after rising eightfold in seven months. Half of its gain was wiped out, with the stock now at USD 1,175. Despite looming overcapacity among major cloud providers, 16 out of 24 analysts still recommend 'Buy' with an average price target of USD 2,095.

Infineon is feeling the shift in market climate, with its stock giving back around 40% of its gains due to weakness in European electric vehicle sales and reduced inventory among industrial end customers. Nevertheless, it remains 50% above its long-term average, with expected earnings to EUR 2.75 next year and a moderate P/E ratio of 21.