Chip stocks have experienced a decline for eight consecutive sessions, marking the longest losing streak in 16 years. The iShares Semiconductor ETF (SOXX), a $44.7 billion BlackRock fund tracking 30 US-listed chipmakers, closed at $514.71 on Thursday, which is nearly 14% below its October peak.
The fund's top 10 holdings, including companies like AMD, Intel, Nvidia, and Broadcom, account for approximately 62% of its total assets. Intel shares have declined by more than 20% over the past two weeks, while AMD recorded a drop of over 5% during intraday trading on October 14.
Market pressure is attributed to several factors, including concerns over AI spending, as OpenAI reportedly missed revenue estimates, and rising inflation with a 3.7% year-over-year increase in September consumer prices. Traders currently estimate a 92% probability of another Federal Reserve rate hike this year.
Despite the sell-off, demand remains high, evidenced by TSMC reporting a 68.7% increase in third-quarter profit. Goldman Sachs notes that major technology companies plan approximately $800 billion in capital expenditures for the current year, suggesting that future performance may depend on borrowing costs.
Technical indicators show the SOXX ETF trading below its 50-day moving average, with the Relative Strength Index falling to 36. Analysts from UBS and JPMorgan suggest the current market movement represents a recalibration of expectations rather than a fundamental collapse of the AI investment sector.
