Key Points
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The PHLX Semiconductor Index dropped for eight straight sessions through Oct. 16, down around 16%.
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Nvidia stock climbed in the next year after four of the six past streaks of at least eight sessions since 1999.
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Nvidia expects around $108 billion in revenue this quarter, up from $57 billion a year earlier.
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Chip stocks just had a tough two weeks. The PHLX Semiconductor Index, a widely followed measure of chip stocks, slid for eight straight trading sessions from Oct. 7 through Friday, Oct. 16. In that span the index dropped around 16%. Going by daily closing prices, it hadn’t fallen so many days in a row since October 2008.
Nvidia (NASDAQ:NVDA) did better than the index but still slid about 10%, from a record close of $239.24 on Oct. 6 to $214.13. The sell-off came as worries over interest rate hikes, the financing behind artificial intelligence (AI) projects, and competition weighed on chip stocks worldwide.
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The index bounced about 1.6% on Monday as of this writing. But after a fall like this, should investors buy Nvidia stock now or wait?
Image source: Getty Images.
Four gains, two losses
Since Nvidia‘s shares began trading in 1999, the chip index has fallen at least eight straight sessions six other times: in May and September 2002, May and June 2006, late December 2007 through early January 2008, and October 2008. (The May 2006 streak lasted nine sessions, so this one isn’t a record. It’s the longest in 18 years.)
To see what followed, I measured Nvidia’s share price from the last day of each streak to the same date a year later, using daily closing prices and leaving out dividends.
Nvidia stock was higher a year later in four of the six cases. After the September 2002 streak, shares rose 118%. After the October 2008 streak, they more than doubled. The two 2006 streaks were followed by gains of 47% and 87%.
But the other two cases were ugly. A year after the May 2002 streak, the stock was down 31%.
A year after the streak that ended in January 2008, it was down 69%.
What separated the winners from the losers?
Notably, both losing cases came before the worst of a long downturn in chip stocks. Measured the same way, the index itself was down another 22% a year after the May 2002 streak and another 38% a year after the one that ended in January 2008.
The two biggest gains came late in those same downturns. The index bottomed only around two weeks after the September 2002 streak ended, and about six weeks after the October 2008 streak. The 2006 streaks, meanwhile, came in a pullback that didn’t last, and the index was up 4% and 13%, respectively, in the next 12 months.
In other words, the streak itself didn’t tell investors much. What counted was where chip stocks were in a bigger downturn, and that was only clear looking back.
Nvidia’s sales are still rising fast
That’s why I’d focus on the business rather than the chart. And Nvidia’s numbers don’t look like those of a company heading for a slump, at least not yet.
Showing how strong demand for its chips remains, Nvidia’s revenue in the second quarter of fiscal 2027 (the period ended July 26, 2026) surged 106% year over year, to $96.2 billion. That was an acceleration from 85% growth in fiscal Q1. Operating income climbed 124% from the year-ago quarter, to $63.7 billion. What’s more, management guided for fiscal third-quarter revenue of $108 billion, plus or minus 2%, against $57.0 billion the year before. At the midpoint, that’s growth of around 89% — slower than in the second quarter, but still nearly 90%.
Of course, the worries driving this sell-off could become something bigger. If higher rates or tighter financing lead big customers to slow their data center spending, Nvidia’s growth could cool fast. But so far, the company’s own results don’t show that happening.
Meanwhile, at around $217 as of this writing, Nvidia’s stock trades at about 14 times the expected earnings for its fiscal 2028 (which ends in January 2028), using Wall Street’s average estimate. Arguably, investors paying that price are already expecting growth to slow from here.
Does the losing streak make Nvidia stock a buy? Not by itself. In 2002 and early 2008, a drop like this turned out to be an early step in a far deeper decline in chip stocks.
But I think Nvidia’s growth and its price make the stock worth a look today. Given how those two early streaks went, though, I’d probably buy in stages over a few months rather than all at once.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
