Chip stocks post their longest losing streak since 2008

What happened: Chip stocks fell eight days in a row, their longest losing streak since 2008. On Friday the chip index fell almost 4%, with all 30 of its stocks down. The morning of the show they bounced back almost 3% but were still down about 13% since October 6. Two worries drove the slide: heavy borrowing by AI companies and hotter-than-expected inflation. A big chip stock fund is still up about two thirds this year.
The claim: Nvidia CEO Jensen Huang told Bloomberg all of this is going to pass, though he sells the chips.
Austin's take: Austin agrees with Huang and calls it a blip and an opportunity. He explains that chips are physical infrastructure needing financing, so rising inflation and Treasury yields raise borrowing costs, and he flags circular financing, like Nvidia helping fund data centers, as a domino risk. Unlike the dot-com era, he argues, real demand exists out to 2029 or 2030, and older GPUs are staying useful longer than expected. He still expects consolidation and winners and losers.
Why it matters: If you own an S&P 500 fund, you own a big slice of these chip stocks.
What to do: Know your exposure through index funds before reacting to daily swings, and weigh the borrowing and inflation risks against the demand story.

The Loop