Oct 17, 2026

Chip Stocks Slide 8 Days; Huang Says the Rout Will Pass

Chip stocks fell for an eighth straight session, their longest losing run since 2008, as Nvidia's Jensen Huang said the AI selloff will pass and Taiwan moved to criminalize chip smuggling to China.

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Semiconductor stocks closed lower on Friday, October 16, for the eighth trading session in a row, the longest losing run for the Philadelphia Semiconductor Index (SOX) since the 2008 financial crisis. As roughly $2 trillion in chip-sector market value disappeared, Nvidia CEO Jensen Huang told Bloomberg the turmoil is temporary. Meanwhile, Taiwan moved to criminalize AI chip smuggling to China, and Germany prepared a new industrial AI pact with Nvidia.

A historic losing streak

The selloff deepened into the end of the week. According to a tally by TECHi, the SOX fell 3.83% on Friday to close at 11,137.29. That leaves it 15.7% below its October 6 close and almost 24% under its June record. The tech-heavy Nasdaq Composite dropped 2.15% on the day, and the S&P 500 lost about 1.1%. KuCoin's market wrap also reported the Nasdaq's 2.15% fall.

Stocktwits, citing TradingView data, put the market value erased during the run at about $2 trillion. Measured from each stock's own 52-week high, the figure is closer to $4 trillion. Even after the slide, the index was still up nearly 60% for the year, and it has now gone through five corrections of 10% or more in 2026.

The damage was broad. GuruFocus, citing S3 Partners data, reported that only 10 of the index's 30 members were down less than 10% over the streak. Coherent fell almost 30%, and Astera Labs, Macom and Credo each dropped more than 20%. The same S3 data, which Bloomberg compiled, shows short sellers betting against chip stocks sitting on about $32 billion in paper gains over seven sessions, Quartz reported.

The pain wasn't limited to AI accelerator makers. Intel and AMD each fell about 3% in Friday morning trading, 24/7 Wall St. reported, as investors kept rotating out of AI-linked chip names. Equipment makers Applied Materials and KLA have fallen further from their highs than Nvidia.

What's driving the slide

No single catalyst explains the drop, and the timing is odd. ASML recently reported record quarterly sales, and TSMC posted revenue growth of about 51% and raised its outlook, yet both stocks fell. TECHi notes that the 10-year Treasury yield actually dropped during the streak, so rising rates alone don't account for it.

The explanation analysts return to most often is AI financing. Investors are questioning whether companies can earn enough from AI to justify the spending, and how the data center buildout will be paid for. AI cloud operators that borrow heavily to add capacity, such as CoreWeave and Nebius, have been hit hardest, and their suppliers have followed. GuruFocus reported that CoreWeave shares fell more than 25% amid default concerns. Other factors cited include stubborn inflation (September CPI rose 3.7% from a year earlier), higher oil prices and growing competition in memory chips, including from Chinese rivals.

Huang: "All of this will pass"

In an interview with Bloomberg, Huang said the market turmoil would pass. He described AI as a transformative technology and argued that returns on large equipment investments will eventually calm investors. In remarks reported by Oninvest, he said news flow won't change the fundamentals and urged investors to focus on first principles. Nvidia shares have fallen in seven of the last eight sessions, though the stock held up better than many peers on Friday morning. Huang also defended CoreWeave, in which Nvidia is a major investor. He said its finances are becoming more stable and that it doesn't need Nvidia's help.

Taiwan moves to criminalize chip smuggling

Chip policy also moved this week. Taiwan's Economic Affairs Minister Kung Ming-hsin confirmed plans to add assembled AI servers and advanced semiconductors to the island's controlled-commodities list. Once the rules take effect, unauthorized shipments of that hardware to China would become a criminal offense. Startup Fortune reports that the penalties would sit under Taiwan's Foreign Trade Act, and that a legislator has drafted an amendment adding a clause on chips bound for mainland China. Today, only listed entities such as Huawei and SMIC require a permit.

The move is meant to align Taiwan more closely with US export restrictions and to close smuggling routes. Bloomberg Law tied it to the US–Taiwan trade deal. Neither the penalty levels nor an effective date have been announced, and the measures still need to be formally adopted.

Germany lines up an Nvidia pact

In Europe, Reuters reported that Germany plans to announce a cooperation agreement with Nvidia next week, according to government sources. The deal aims to expand AI use across German industry and would involve partners beyond Nvidia. Handelsblatt, which first reported the plan, said it would support physical AI tools for training robots and self-driving vehicles, as well as industrial AI models. Financial terms were not disclosed in the Reuters report.

What to watch

Next week brings the German announcement, and investors will be listening for clearer signals on AI spending and financing from the large cloud companies. The first test is whether the SOX can snap its streak on Monday. Some strategists warn that bearish traders could be caught out by a sharp rebound if big tech delivers upbeat AI news heading into the seasonally strong end of the year.