Warsh’s Fed Shift and Hormuz Risks Hit AI Chip Stocks

The Philadelphia Semiconductor Index and artificial-intelligence shares entered the selloff with elevated valuations built on expectations for rapid earnings growth and sustained capital spending. That left the sector vulnerable as investors reassessed the outlook for interest rates. Tensions around the Strait of Hormuz added another concern: a disruption to a critical energy route could lift oil, freight and production costs, complicating the Federal Reserve’s effort to contain inflation.

Semiconductor and AI-linked stocks have recently fallen across the board as markets price in both geopolitical risk and a less predictable Fed. Newly installed Chair Kevin Warsh declined to offer forward guidance, depriving investors of a clear rate path or an identifiable policy backstop. With no timetable for easing, traders are testing the central bank’s tolerance through sharper moves in equities and bond yields, accelerating the compression of valuations in the market’s most expensive technology names.