Chip Stocks Fell for Eight Days; Micron's Profit Is Still at a Record

The chip selloff reached its eighth session on Friday, October 16. The Nasdaq Composite fell 2.14% to 26,140, and the S&P 500 lost 1.09% to 7,659. The S&P 500's technology sector dropped more than 3%.

The Philadelphia Semiconductor Index (SOX) was down about 2% in the afternoon. According to Stocktwits, the streak matched the index's longest since the 2008 financial crisis.

The index had already lost more than 12% over the previous seven sessions. TradingView data put that at roughly $2 trillion in market value.

Bears profited over the same seven days. S3 Partners data compiled by Bloomberg show short sellers in chip stocks sitting on about $32 billion in paper gains.

What Fed the Selloff

Three causes landed in the same week. September inflation came in hot at 3.7% a year, and the 10-year Treasury yield rose to around 5.1%. CoreWeave, the debt-funded cloud provider, fell nearly 12% on Friday; it carries about $50 billion of debt.

The third cause was China. Chinese memory maker CXMT said it will launch a server-grade DDR5 memory module by year-end. Over the week, SK Hynix's US-listed shares fell 18%, SanDisk 15% and Micron 13%.

Micron set a record close of $1,088 on October 7. It traded around $894 on Friday morning and ended the day down more than 5%. The SOX now sits about 22% below its June 22 record, its second bear market this year.

The chart shows how Friday's losses spread into the tech-heavy index.

Bank of America's Cisco Comparison

Bank of America analyst Vivek Arya drew a comparison in a Friday note. Nvidia, Broadcom and Micron trade at about 13 times forward earnings on average. Cisco traded between 10 and 20 times after the 2000 crash.

"Investors are paying post-crash multiples for a cycle that hasn't crashed."

Arya's case rests on demand. Cloud and neocloud capital spending is expected to rise 98% to $1.01 trillion in 2026, then reach $1.39 trillion in 2027. Rental prices for older Nvidia chips are up 12% to 37% this year.

The market is not reading that multiple as a discount. It is reading it as a warning that the profits will not last.

Why a Low Multiple Can Be a Trap at the Peak

The P/E ratio divides price by current or next year's earnings. When earnings sit at the top of a cycle, the ratio comes out low. In memory, most costs are fixed, so a small price drop becomes a large profit drop.

Micron's own guidance calls for $38.15 of earnings per share this quarter. Annualized, that is about $153, and an $894 share price is roughly 6 times that. The math is cheap only if those profits hold.

That is why Cisco keeps coming up. The stock peaked at $82 in March 2000, fell to $8.12 by October 2002, and did not regain that peak until March 2026.

The Part That Doesn't Fit

Demand data do not match the selloff. Roundhill Investments CEO Dave Maza says memory supply is sold out through 2027. Bank of America says AI hardware runs near full utilization, with no equivalent of the idle fiber of 2000.

Korea diverged on Friday. Samsung rose 2.62% and SK Hynix 0.79%, their first gains after nine and eight sessions. Between October 6 and 15, Samsung had fallen 23.9% and SK Hynix 31.5%.

What It Means for Investors

• The market is pricing a fall in memory prices; it is not yet pricing Micron's record $61.5 billion revenue guidance.
• The sharpest moves hit debt-funded CoreWeave and high-fixed-cost Micron, SanDisk and Western Digital; Nvidia was down a milder 5.7% for the week through Friday morning.
• The date to watch is SK Hynix's results on October 28 Seoul time, which will show where HBM and server memory prices are heading.
• The risk that would break the thesis, as Arya also lists, is a credit event at a cloud provider or a further rise in rates.

Sources: Index closes come from TheStreet's live blog; intraday SOX data from Stocktwits and Investing.com; short-seller data from S3 Partners as compiled by Bloomberg and reported by Quartz. The Bank of America note is as reported by Benzinga. The SK Hynix date comes from the company's October 14 SEC Form 6-K. The SOX's Friday closing percentage could not be verified at the time of writing; the intraday figure is used.