Chipmakers' stocks are heading toward their longest losing streak in 20 years. The Nasdaq lost 1%.

On Friday, October 16, the sell-off in chipmakers’ stocks continued for the ninth consecutive day, while the rest of the U.S. stock market showed mixed performance. The last time such a prolonged series of declines in semiconductor stocks was observed was on May 18, 2006, notes Barron’s.

The iShares Semiconductor ETF and the VanEck Semiconductor ETF are heading into their ninth consecutive day of declines on October 16, falling 2% and 1.7%, respectively. Shares of memory manufacturer Micron Technology are down 4%, chipmaker Intel is down 4.5%, AI chip manufacturer Nvidia is down 0.4%, and AI server manufacturer Dell is down 3%. Against this backdrop, the Nasdaq Composite technology index lost 1.3% on Friday.

Technology and AI-related stocks are showing this kind of momentum against the backdrop of generally moderate performance by the blue-chip index (which rose 0.4% on October 16) and the broad-market S&P 500 index (which rose 0.1%). Approximately 390 companies in the S&P 500 are trading higher, but stocks tied to investors’ bets on AI remain under heavy pressure, notes Barron’s.

CoreWeave's stock fell 9.5% on Friday, and has lost more than 22% since the start of the week. Investors are concerned about the sharply rising interest rates on the debt of the AI cloud computing provider.

Among other factors, competition from Chinese manufacturers is putting pressure on chipmakers’ stock prices: For example, this week, ChangXin Memory Technologies (CXMT) of China announced that it has made progress in developing technology that will increase data storage density in chips—SK Hynix and Samsung are also working on similar architectures. And on October 16, amid global demand for memory chips, CXMT reported a sharp increase in profits and revenue. According to preliminary estimates, its net profit for the first nine months of the year is expected to total 131 billion–132.5 billion yuan ($19.6–19.8 billion), whereas in the first nine months of last year, the company posted a net loss of 5.3 billion yuan. Revenue is expected to reach 265 billion–270 billion yuan, compared with 32.1 billion yuan a year earlier.

— “This week, comparisons between the AI boom and the dot-com bubble have grown louder,” Barron’s quotes Dennis Debuscher, president and chief market strategist at 22V Research, as saying.

— “Lately, the ‘bears’ have been wondering whether data center construction will grow fast enough to utilize all the graphics processing units, the sales volume of which is already factored into Wall Street’s aggressive revenue forecasts for the semiconductor industry, — explained Warren Pace, co-founder and strategist at 3Fourteen Research, whose note is cited by Barron’s — “Overall, fear reigns in the market: over the past 24 hours, we’ve received more panicked calls, emails, and private messages than during any other comparable period.”

— “Investors still both love and hate the tech sector,” said Kit Lerner, chief investment officer at Truist Bank, in an interview with MarketWatch. According to his calculations, the IT sector has risen by about 240% during the current market uptrend, but has seen its price drop by 10% or more on five separate occasions. Lerner is not yet buying the discounted shares of semiconductor companies, even though the Philadelphia Semiconductor Index has fallen to near its September lows. “We’re approaching a buying opportunity, but for now we want to see at least some stabilization in prices,” he explains. The analyst advises holding onto shares of the largest tech companies, such as the “Magnificent Seven”: high interest rates will affect them relatively little.

— Michael Monaghan, portfolio manager at Founders ETFs, recommends taking a closer look at Dell’s stock. Since the start of the week, Dell’s stock has fallen by nearly 20%. “This company absolutely dominates the market for on-premises AI servers, so for anyone investing for the long term, we advise that days like this present an incredible buying opportunity,” says Monaghan. Among other investment ideas, the investor highlighted shares of CrowdStrike and Zscaler, developers of cybersecurity systems.

This article was AI-translated and verified by a human editor