US Chipmakers Market Lost $2 Trillion

Chipmakers' stocks lost about $2 trillion over eight trading sessions: the series of declines was the longest since 2008. The sector is pressured by yields above 5% and doubts about the justification of AI spending.

The Philadelphia Semiconductor Index lost more than 11% last week and closed eight consecutive sessions in the red. On Monday, it recovered some of the losses, but CNBC's investment committee members were divided: some see a buying signal, while others see only a respite amid a large-scale correction.

Inflation turned out to be higher than expected, increasing the chances of a Fed rate hike. The minutes of the September meeting showed that most officials consider another hike in 2026 quite likely. According to Schwab, the yield on ten-year Treasury bonds was 5.10% at Monday's opening.

One participant noted that the yield especially pressures neocloud companies – firms with high debt loads renting out capacities for AI calculations; a decrease in yields by 0.5–0.75 percentage points would ease the pressure. Another considered hedge funds reducing positions a positive signal and reminded that November and December are traditionally favorable for stock indices. A skeptic pointed out that in recent days, capital has been flowing more into healthcare and energy than into industrial companies like Caterpillar.

Participants also disagreed on the timing of the peak in AI investments: estimates range from one to four years. One mentioned Micron's stock buyback and its take-or-pay contracts, where the client pays for chips even if they don't use them; an opponent countered that during a downturn, such contracts offer little protection.

The next marker is quarterly results. This week, Lam Research, Texas Instruments, Western Digital, Meta (recognized as extremist in Russia), Tesla, and SpaceX are reporting. According to one analyst, the main thing is not the mere fact of continued AI investments, but their real profitability: when ten-year yields are above 5%, investors compare AI project reports with the alternative cost of capital. This affects the entire chain – from chipmakers to the Magnificent Seven.