Tech & AI
Chip stocks tumble as oil and AI financing worries weigh
Semiconductor funds and stocks fell sharply on Thursday as higher oil prices, worries about AI financing and a wider tech selloff weighed on the sector. Funds built to magnify chip moves took the hardest hit.
Quick Read
- Chip funds and stocks including Nvidia, Lam Research and Coherent fell sharply on Thursday.
- Reports linked the selloff to higher oil prices, AI financing worries and a broader retreat in tech stocks.
- Funds built to magnify daily chip moves, such as SOXL, lost far more than the sector itself.
- The Federal Reserve's interest-rate decision on Oct. 28 is the next scheduled checkpoint.
How far did chip stocks fall?
Chip stocks fell broadly on Thursday. The iShares Semiconductor ETF (Nasdaq: SOXX), a fund that trades like a single stock and holds shares of chip companies, tumbled 6.8%. The VanEck Semiconductor ETF (Nasdaq: SMH) fell 6.0%.
Why it matters: Several company shares fell further. Coherent (NYSE: COHR) tumbled 12.5%, and Lam Research (Nasdaq: LRCX) dropped 11.8%. Nvidia (Nasdaq: NVDA) fell 4.4% and lost $240 billion in stock market value.
By the numbers: Reports said both chip funds reached their lowest levels in months. The iShares fund now sits 27.4% below its high of the past year.
Why did the sector sell off?
Reports tied the drop to several pressures at once. They named higher oil prices, worries about how AI spending is financed and a wider retreat in technology stocks.
Oil prices climbed during the session. President Donald Trump blamed Iran for the rise in a social media post, according to reports.
The damage stayed mostly in tech. The technology sector fund tumbled 3.3%, and the Nasdaq-100 slid 2.9%. The S&P 500 slid 1.2%. Across the market, 803 stocks rose and 591 fell.
Why did SOXL fall so much more?
SOXL, a Direxion fund, tumbled 20.5%. Reports said it was among the most actively traded funds of the day.
The fund is built to deliver a multiple of the daily return of a chip index, before fees. That design magnifies gains and losses alike. Its goal applies to each trading day on its own, not to longer holding periods.
After Thursday, SOXL sits 72.7% below its high of the past year.
What comes next for chip stocks?
What’s next: Reports framed the open question as whether traders see the drop as a bargain or keep pulling back from volatile AI-linked trades. Volatile here means prone to big, fast price swings.
The selling did not stop at the close. In after-hours trading, the iShares fund fell another 0.7%.
The next scheduled checkpoint is the Federal Reserve's interest-rate decision on Oct. 28 at 2 p.m. ET. The government's GDP report on economic growth follows on Oct. 29 at 8:30 a.m.
For readers
What it could mean for you: This story matters most for people who own a technology or semiconductor fund, including one held inside a 401(k) or IRA. A sector fund concentrates on a narrow industry, so a chip selloff can move it far more than a broad index fund. Owners of funds built to magnify daily moves, such as SOXL, may see much larger swings in both directions. Further moves could follow as the Fed's Oct. 28 decision and new economic data shape views on interest rates and AI spending.
Questions and answers
Why did semiconductor stocks fall on Thursday?
Reports linked the drop to higher oil prices, worries about how AI spending is financed and a wider selloff in technology stocks. The iShares Semiconductor ETF tumbled 6.8%.
What is SOXL and why did it fall more than other chip funds?
SOXL is a Direxion fund built to deliver a multiple of the daily return of a chip index, before fees. That design magnifies losses as well as gains. The fund tumbled 20.5% on Thursday.
How did the broader stock market do?
The S&P 500 slid 1.2% and the Nasdaq-100 slid 2.9%.
When is the next Fed interest-rate decision?
The Fed announces its next rate decision on Oct. 28 at 2 p.m. ET, followed by the chair's press conference.
The numbers
| iShares Semiconductor ETF (SOXX) price | $475.69 |
|---|---|
| iShares Semiconductor ETF (SOXX) change | −6.79% |
| iShares Semiconductor ETF (SOXX) market value | $39 billion |
| iShares Semiconductor ETF (SOXX) 52-week high | $655.01 |
| VanEck Semiconductor ETF (SMH) price | $523.35 |
| VanEck Semiconductor ETF (SMH) change | −5.99% |
| VanEck Semiconductor ETF (SMH) market value | $63 billion |
| VanEck Semiconductor ETF (SMH) 52-week high | $668.91 |
| Nvidia (NVDA) price | $212.21 |
| Nvidia (NVDA) change | −4.40% |
| Nvidia (NVDA) market value | $5.1 trillion |
| Nvidia (NVDA) 52-week high | $239.24 |
| S&P 500 change | −1.21% |
| 10-year Treasury yield | 4.96% |
Thursday’s close
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