Markets
The Chip Index Fell 6.7% on Thursday, Its Worst Day Since June: Lam Research Lost 12%, AMD, Marvell and Intel 8%, and the Dow Finished Up 12 Points
The Philadelphia Semiconductor Index fell 6.72% on October 22, its biggest one-day drop since June, after Lam Research warned that supply constraints would cap shipments into 2027. The Nasdaq Composite lost 2.6% to 26,008.86 and the S&P 500 1.21% to 7,663.43, while the Dow, light on chipmakers, rose 11.89 points to 52,867.98.
Thursday was a lesson in index construction. The Nasdaq Composite fell 694 points, or 2.6%, to 26,008.86, its worst session since June; the S&P 500 lost 1.21% to 7,663.43, its worst day since July, according to the Associated Press; and the Dow Jones Industrial Average, a price-weighted list of 30 stocks with a single chip designer in it, closed 11.89 points higher at 52,867.98. The difference between those three numbers is almost entirely one industry. The Philadelphia Semiconductor Index fell 6.72%, its largest daily decline since June, to its lowest level since July 29, and StockTitan's intraday tally found that AI and chip companies accounted for 93% of the market value the Nasdaq-100 lost in the morning.
The trigger was a conference call, not a number. Lam Research had reported a record quarter after Wednesday's close, and the stock was already down in after-hours trading, but on Thursday investors focused on what management said about supply. Chief financial officer Doug Bettinger told analysts that the December-quarter revenue guide "would have been a bit higher if not for some near-term supply chain constraints," and chief executive Tim Archer said that "as we move into calendar year 2027, we see clean room space availability and supply chain constraints" as a limit, adding that "the whole industry is going to have to work through very similar things." A semiconductor equipment maker saying it cannot ship everything it has been asked for is, read one way, a sign of strong demand; the market read it the other way, as a cap on how many chips can be made next year, and sold the companies that would make them.
The losses, per 24/7 Wall St.'s closing quotes: Lam Research −11.76% to $230.15, Marvell −8.70% to $223.47, AMD −8.10% to $507.93 and Intel −8.04% to $85.49, a week before Intel's own report on October 29. Nvidia fell about 4.4% and Micron declined with the other memory names. The iShares Semiconductor ETF lost 6.79% and the Invesco QQQ Trust 2.86%. Meta's 7% fall on its own cash-flow report added to the pressure on the AI trade, and Brent crude settling above $113 a barrel gave investors one more reason to reduce risk.
Context matters here. Chip stocks had already fallen eight sessions in a row into October 16, their longest losing streak since 2008, and Lam was down about 20% over three months before Thursday. A 6.7% drop in a sector index that had already been falling is a capitulation-style move, and in the past such days have come both at the start of larger declines and at their end; the session alone does not say which. What it does say is that the AI trade is now being judged on constraints rather than demand: the question for the megacap and chipmaker reports still to come this season, Intel's included, is whether the companies spending the money still have something to spend it on.
For readers of the index data, the Dow's flat close on a day like this is not a sign of resilience. It is a sign that the Dow does not hold many semiconductor stocks, and that a market-cap-weighted index such as the S&P 500, in which chipmakers and their biggest customers make up a large share of the value, carries this industry's risk whether or not its owners intend it.