COMMENTARY
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The post-election rally lasted exactly one session. Chip stocks gave it all back on Thursday and then some.
Nvidia fell 8.7%, enough to wipe out its entire gain for the year. The stock now sits about 2% below where it started 2026, on pace for its worst annual showing since 2022. Broadcom dropped 9.3% and is also underwater for the year. The two biggest names in the AI chip trade have given investors nothing in ten months.
Micron and AMD each shed more than 15%. Sandisk, already down 7% on Wednesday, lost another 15%. The equipment names got hit just as hard: Lam Research fell 14%, Applied Materials 12%, KLA 11%.
The iShares Semiconductor ETF was down more than 12% at one point, its worst day since March 2020. The Nasdaq slid roughly 4% into its second correction of the year and the Dow lost 1,800 points.
So what cracked? Three things landed at once.
First, politics. Democrats swept both chambers in Tuesday’s midterms, and investors are reading that as a tougher regulatory climate for data center construction. Voter opposition was already building, with freeze proposals floated in Texas. The market is now pricing in a slower, more expensive AI buildout.
Second, China. Beijing is dragging its feet on approving imports of Nvidia’s H200 chips.
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Third, company-specific noise. Qualcomm issued a soft profit forecast and blamed rising component costs. Micron paused plans for a Taiwanese plant over labor disputes. Neither is an AI demand story, but in a selloff nobody waits to sort the details.
AMD CEO Lisa Su told Yahoo Finance the market is being “a little bit short-sighted” and that she sees no slowdown in AI chip demand.
So is the trade unwinding? The leaders are back to zero. The high fliers have halved. AMD is still up roughly 101% for the year and Micron about 148%, but both have surrendered around half their 2026 gains and sit more than 30% below their highs.
Zoom out and the picture is sharper. Nomura’s Charlie McElligott tracks the big 2026 winning trades as themes, and all of them are getting unwound at once. The “semis-energy barbell,” up 49% on the year, lost 9% over the past month and 8% in the past week alone. “Long AI enablers, short hyperscalers,” up 34% YTD, is down 14% over the past month. And that’s before Thursday.
