Chip stocks snap their worst losing streak since 2008 on TSMC's spending

Chip stocks rebounded after an eight-session slide, while TSMC's higher spending plans reinforced the longer-term outlook for semiconductor-equipment makers.

The Philadelphia Semiconductor Index fell for eight straight sessions through October 16, its longest losing streak since 2008, as roughly $2 trillion in market value was erased across chip and AI-related stocks. The index rebounded on October 19. Benzinga reported gains of 4.38% for Lam Research, 4.11% for Applied Materials, 4.34% for Intel and 3.64% for Micron during that session.

What turned the tide was less a single headline than a convergence of relief. JPMorgan upgraded Intel to Neutral from Underweight while retaining an $85 price target, and buyers returned after the iShares Semiconductor ETF had fallen nearly 14% from its October high. That's the unglamorous mechanics of a bounce: not a new catalyst so much as exhausted selling meeting real conviction underneath it.

And the conviction has a specific source. TSMC reported third-quarter results on October 15 that were hard to argue with: revenue up 51% year over year to roughly $47 billion, net income up 69% to nearly $24 billion. The company reiterated its 2026 capital budget at $60 billion to $64 billion, a figure that itself marks a sharp increase from the $52 billion to $56 billion range TSMC had guided to back in January, before raising it again over the summer. CFO Wendell Huang told analysts on the call that spending from 2026 through 2028 will be "significantly higher" than the roughly $101 billion TSMC spent over the prior three years combined, though he said it was too early to put a specific number on 2027 or 2028.

That hedge matters more than it sounds. Huang wouldn't commit to a number, but he didn't need to: UBS already has 2027 capex pegged near $90 billion and 2028 near $105 billion, while Morgan Stanley sits at $83 billion and $92 billion. Goldman Sachs and BofA both see 2027 spending around $85 billion. Four banks landing in roughly the same range, built off the same earnings call, is the kind of signal that can move equipment stocks more than a press release would.

Nvidia doesn't need anyone's capex guide to validate its chips get bought. ASML, Applied Materials, Lam Research and KLA are a different story: they sell the tools that make the chips, and their order books only fill up if foundries and memory makers actually sign the purchase orders years in advance. When those four stocks move harder than Nvidia on a TSMC print, that's the market pricing in real, committed spending rather than just enthusiasm for AI demand in the abstract. ASML said with its October quarterly results that its planned supply for 2027 and 2028 would not fully meet customer demand, a scarcity call that only makes sense if chipmakers intend to expand capacity.

Micron added its own data point on the memory side. Cantor Fitzgerald said the company expects supply-demand conditions to be tighter in 2027 than in 2026, with constraints persisting through 2028. SanDisk and Western Digital rode the same logic higher. None of this erases the worry that triggered the selloff in the first place, that the AI buildout has outrun anyone's ability to prove a near-term return on it. CoreWeave's slide was part of what dragged the sector down eight sessions running, and that underlying tension between capex conviction and revenue proof hasn't actually resolved.

What changed is simpler. The sector had fallen far enough to attract buyers, while the world's largest contract chipmaker outlined a substantially higher three-year investment plan. TSMC isn't blinking. Whether the rest of the AI trade deserves the same confidence is still the open question the market will keep re-pricing, week to week, for as long as this cycle runs.

Also read: Texas Instruments posts best quarter in years as analog chips roar back • Gold crashes 6% a day after record high as Goldman holds $4,900 target • Barclays will cut 5,000 jobs this year and says AI is why

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