Semiconductor shares came under heavy selling pressure on Monday, with Intel and Advanced Micro Devices leading the decline as a sharp jump in crude oil prices and another leg higher in Treasury yields weighed on risk assets across the board.
Intel shares dropped more than 6%, while AMD lost over 5%. The Philadelphia Semiconductor Index, a broad gauge of chipmakers, fell 3%.
Oil and yields combine to pressure growth stocks
Brent crude rose more than 3% to trade at $108 a barrel, and West Texas Intermediate futures added 3.5% to reach $95.64. The move followed President Donald Trump's rejection of ceasefire conditions presented by Iran, reintroducing a geopolitical risk premium into energy markets.
At the same time, government bond yields extended last week's climb. The benchmark 10-year Treasury yield traded above 5.2%, while the 30-year yield topped 5.5%, with both sitting near multiyear highs.
Rising oil prices can feed inflation expectations and reinforce the case for interest rates staying elevated for longer. Higher bond yields, meanwhile, tend to weigh disproportionately on high-growth technology names because they raise the discount rate applied to future earnings. Chip and AI-linked shares, which carry much of their valuation in projected long-term growth, are especially sensitive to that dynamic.
Profit-taking after a powerful rally
Monday's pullback also appears to reflect profit-taking after an unusually strong short-term run. Intel climbed from roughly $89 in early September to above $123 by September 25, including a 9.1% single-session gain in the prior trading day. That advance left the stock stretched and vulnerable to a reversal.
Despite the decline, both Intel and AMD have gained about 30% over the past month, supported by growing optimism that Meta's Muse AI technology could drive additional demand for general-purpose CPUs.
Meta's Muse fuels CPU optimism
The bull case rests on the idea that increasingly capable AI agents, which perform more tasks independently, will require greater computing resources. That could expand the market for server CPUs made by Intel and AMD, as well as Arm-based processors. Meta has previously said that as its agentic AI efforts advance, compute requirements are evolving to demand more CPU capacity.
"The market has interpreted Muse as a boon for the already significantly bottlenecked CPU market," said Michael O'Rourke, chief market strategist at JonesTrading.
The enthusiasm helped AMD cross the $1 trillion market-capitalisation threshold for the first time last week.
Analysts raise targets as CPU outlook improves
The rally has drawn increasingly bullish analyst forecasts. BofA Securities lifted its price target on AMD to $720 from $620 while keeping a Buy rating. The firm expects the server CPU total addressable market to grow from $61 billion in 2026 to $211 billion by 2030, with roughly $180 billion of that 2030 figure tied to AI. The analyst also cited the Anthropic-Akamai CPU infrastructure deal as evidence that CPUs are becoming more important as AI systems grow more agentic.
Meta expanded the Muse ecosystem further at its Connect event, unveiling Meta Charm, a small handheld device designed to give users direct access to Muse rather than relying on AI applications running on smartphones. CEO Mark Zuckerberg said personal superintelligence would arrive first and prove larger and more important than many expect, adding that Muse would soon be available across Meta's smart glasses lineup. Meta is also broadening Muse through partnerships with Walmart, Best Buy, Sephora, Wayfair, Dick's Sporting Goods and Gap.
JPMorgan, Citizens, KeyBanc and other analysts have raised their Meta price targets on expectations that Muse could support the company's growth, adding to broader enthusiasm around the AI infrastructure trade.
This article is for informational purposes only and does not constitute financial advice.
