Chips Snap Historic Slide as Bargain Hunters Return
Eight-Day Rout Ends With 1.6% Index Gain
JPMorgan Upgrade Turns Intel Into Rally Leader
AI Names Rebound as Micron, AMD and Nvidia Follow
Lower Yields Offer Relief After 12% Weekly Drop
The official explanation is relief, not resolution. Reuters reported that lower Treasury yields and easing crude prices supported the battered AI trade. The Philadelphia index fell 11.4% on the week. The iShares ETF had fallen for eight straight sessions, its longest streak since September 2015, closing at 493.39 dollars on Oct. 16, down about 16% from its Oct. 6 close of 589.45 dollars and about 25% below its 52-week high of 655.95 dollars. Measured from their own 52-week highs, semiconductor losses totaled close to 4 trillion dollars.
Short Sellers Keep 32 Billion Dollars of Paper Gains
The pain trade cut both ways. Data from S3 Partners showed short sellers made about 32 billion dollars in gross paper profits over seven days as the Philadelphia index fell more than 12%. Equipment makers including Applied Materials and KLA suffered steeper drawdowns than designers, showing stress beyond AI chip designers. CoreWeave, an AI cloud provider carrying a 50-billion-dollar debt load, fell 0.4% after plunging more than 25% last week, despite a Goldman Sachs upgrade to buy. Tesla jumped 3.8% and Alphabet added about 1%, underscoring that money favored a narrower set of stronger AI plays.
Earnings Will Decide Whether the Bounce Holds
What comes next depends on earnings. JPMorgan warned Intel still faces a few more quarters of server share losses, making its Oct. 29 earnings report the next test. The Philadelphia index remains up around 60% year-to-date after surging through early October on AI chip demand, leaving valuations exposed. South Korea's KOSPI fell more than 2% in early trading on Oct. 20 below the 5,700 level, a sign Asian investors remain unconvinced about AI profitability. The rebound stopped the bleeding, but it has not yet restored confidence in AI capital spending.
