Traders work on the floor of the New York Stock Exchange during morning trading on July 01, 2026 in New York City.

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The Nasdaq Composite fell on Wednesday as chipmakers came under pressure following a strong first half of the year.

The Nasdaq Composite shed 0.4%, while the S&P 500 lost 0.1%. The Dow Jones Industrial Average gained 88 points, or 0.2%.

Micron plunged 6%, although it was still up around 277% in the year to date. Sandisk shed 8%, losing some steam after gaining more than 850% in the first half of 2026. Nvidia and Broadcom also fell roughly 2% and 1%, respectively.

Their declines come as investors take profit on semiconductor stocks following a record-smashing first half of the year for the group. The VanEck Semiconductor ETF (SMH) gained 82% in the first six months of the year, marking its best first-half since its inception in May, 2000.

The major averages also closed out a strong first half.

In the first six months of the year, the Dow climbed 8.9%, marking its best first-half performance since 2021. The broad market S&P 500 rose 9.6%, and the Nasdaq climbed 12.8%. The small-cap Russell 2000 surged nearly 22% to clinch its best first-half performance since 1991.

The overall market's outperformance in the first six months of 2026 was driven by a surge in chip and AI-related names, with Tuesday's gains partly due to a rise in chip stocks. A record chip rally added $2 trillion in combined market capitalization to Micron, Intel and Advanced Micro Devices in the second quarter of 2026.

Heading into the second half of the year, Paul Hickey, Bespoke Investment Group co-founder, said that he still likes the sector, but it may be getting a bit too hot.

"Over the long term, we still like the semis, but I wouldn't be aggressive towards it here. This bull market is an AI-driven bull market, that's the theme. If this bull market is going to continue, it's going to be led by tech and probably semis, but they don't have to beat consistently, and you can't go in that kind of pattern for good," he said on CNBC's "Closing Bell: Overtime" Tuesday afternoon. "So I think in that respect they've gotten a little bit…extended. So I would maybe take a breather here."

Traders also kept an eye on the Federal Reserve as Chairman Kevin Warsh delivered remarks at the European Central Bank conference in Portugal. While he didn't give hints about monetary policy for the upcoming meeting this month, he noted that "we've seen that prices are too high."