The chip stocks selloff ran eight sessions. The PHLX Semiconductor Index, known as the chip index, closed lower every session from October 7 through Friday, October 16, 2026, its longest losing streak since at least 2021, and ended at 11,137.29, 15.74% below its October 6 close.
What measurably changed was the price of lending to CoreWeave, an AI cloud provider with about $50 billion of debt: its bonds fell and the cost of insuring its debt against default rose. TSMC said it is being prudent in planning for 2027, and longer-term Treasury yields fell.
With longer-term Treasury yields lower, any rise in the cost of capital came through what lenders and shareholders charged on top, not through interest rates. Whether 2027 demand for AI hardware is softer than investors had assumed is the question the week left open. Market prices are as of Friday's close, October 16, 2026, unless another date is given.
Key Takeaways
- The chip index closed lower for eight straight sessions through October 16, 2026, its longest losing streak since at least 2021, and ended 15.74% below its October 6 close.
- Treasury yields from two years out fell (10-year: 5.27% to 5.09%), while bill yields out to six months edged higher (3-month: 4.21% to 4.26%). Any cost-of-capital effect therefore came through the risk premium, seen most clearly in CoreWeave's bonds.
- CoreWeave fell 33.07% from its October 6 close, against 10.50% for NVIDIA and 2.04% for the S&P 500, while its bonds fell to between 79.15 and 81 cents on the dollar.
- TSMC raised its 2026 growth outlook but said it is “being prudent” in planning for 2027, and one outlet tied Micron's Tuesday decline to a Chinese rival's server DRAM plans.
- The chip index is still up 57.24% for the year and 23.9% below its June 22, 2026 record close.
The Chip Stocks Selloff in Numbers
Every company in the table fell more than the S&P 500 this week. CoreWeave (CRWV) fell the most, 25.21%, and NVIDIA (NVDA) the least, 6.61%. Applied Materials, Sandisk and Lam Research each fell more than 17%.
The AI hardware slide, as of Friday's close
| Company or index | Oct 16 close | Change Friday | Change this week | Change since Oct 6 | Change YTD |
|---|---|---|---|---|---|
| PHLX Semiconductor Index | 11,137.29 | ▼ −3.83% | ▼ −11.41% | ▼ −15.74% | ▲ +57.24% |
| NVIDIA (NVDA) | $214.13 | ▼ −1.43% | ▼ −6.61% | ▼ −10.50% | ▲ +14.82% |
| AMD (AMD) | $528.75 | ▼ −5.95% | ▼ −13.05% | ▼ −18.58% | ▲ +146.89% |
| Broadcom (AVGO) | $328.75 | ▼ −4.52% | ▼ −9.07% | ▼ −12.52% | ▼ −5.01% |
| TSMC ADR (TSM) | $412.61 | ▼ −2.28% | ▼ −8.98% | ▼ −14.45% | ▲ +35.78% |
| Micron (MU) | $878.84 | ▼ −5.63% | ▼ −14.59% | ▼ −15.95% | ▲ +207.92% |
| Sandisk (SNDK) | $1,299.30 | ▼ −6.85% | ▼ −17.86% | ▼ −21.75% | ▲ +447.35% |
| Applied Materials (AMAT) | $409.29 | ▼ −4.82% | ▼ −19.28% | ▼ −22.81% | ▲ +59.26% |
| Lam Research (LRCX) | $263.94 | ▼ −4.87% | ▼ −17.22% | ▼ −20.95% | ▲ +54.19% |
| CoreWeave (CRWV) | $61.39 | ▼ −11.91% | ▼ −25.21% | ▼ −33.07% | ▼ −14.27% |
| Oracle (ORCL) | $128.23 | ▼ −4.64% | ▼ −9.31% | ▼ −11.43% | ▼ −34.21% |
| Nasdaq-100 | 29,187.55 | ▼ −2.50% | ▼ −5.49% | ▼ −6.52% | ▲ +15.59% |
| S&P 500 | 7,659.44 | ▼ −1.09% | ▼ −1.95% | ▼ −2.04% | ▲ +11.89% |
“This week” runs from the October 9 close to the October 16 close, and YTD starts from the December 31, 2025 close.
Eight Lower Closes in a Row
Over five years of daily closes back to October 2021, the chip index's previous longest runs of lower closes were seven sessions, ending September 6, 2022 and May 23, 2025. The largest drop of this run came on Wednesday, October 14, when the index fell 4.30%. The streak belongs to the index, not to every stock: CoreWeave rose on October 9 and on October 15. It also began from a local high, not a record. The record close is 14,634.72, set on June 22, 2026.
What Cost of Capital Means for AI Stocks
Cost of capital is the return lenders and shareholders demand before they will fund a company. It has two parts: a base rate, the yield on US Treasury debt of a similar length, and a risk premium on top. For lenders the premium is the credit spread, the extra yield a company pays above a comparable Treasury. For shareholders it is the equity risk premium.
The idea matters for AI capex, the capital spending on chips, servers, buildings and power for AI computing, because data centers are long-lived assets valued on cash flows many years out. A higher discount rate makes that future cash worth less today. So if the AI trade ran into a higher cost of capital this week, at least one of the two parts should have risen.
The Base Rate: Treasury Yields
The long end of the base rate fell. From October 6 to October 16, the 10-year Treasury par yield fell from 5.27% to 5.09%, or 18 basis points (a basis point is one hundredth of a percentage point). The 30-year fell 21 basis points to 5.43%, the 5-year fell 14 and the 2-year fell 5, to 4.74%. These are net changes: the 10-year rose on October 7 and again on October 9. The Treasury market was closed on Monday, October 12, for Columbus Day while stocks traded, so the table has no row for that date.
Chip stocks fell while longer-term Treasury yields fell
| Date | Chip index close | CoreWeave close | 3-month bill yield | 10-year Treasury yield | 30-year Treasury yield |
|---|---|---|---|---|---|
| Oct 6 | 13,217.82 | $91.72 | 4.21% | 5.27% | 5.64% |
| Oct 7 | 13,066.15 | $88.45 | 4.22% | 5.28% | 5.67% |
| Oct 8 | 12,623.71 | $81.58 | 4.23% | 5.22% | 5.60% |
| Oct 9 | 12,572.42 | $82.08 | 4.25% | 5.24% | 5.60% |
| Oct 13 | 12,208.79 | $77.81 | 4.26% | 5.21% | 5.56% |
| Oct 14 | 11,684.38 | $65.78 | 4.28% | 5.19% | 5.52% |
| Oct 15 | 11,581.21 | $69.69 | 4.28% | 5.10% | 5.43% |
| Oct 16 | 11,137.29 | $61.39 | 4.26% | 5.09% | 5.43% |
Short-term bill yields edged the other way. The 1-month rose 6 basis points to 4.12% and the 6-month rose 6 basis points to 4.34%, while the 1-year was unchanged at 4.46%. The 3-month yield rose from 4.21% to 4.26%, and that rise came before the hotter-than-expected September consumer price report of Wednesday, October 14: it was already 4.26% on October 13, touched 4.28% on October 14 and 15, and ended at 4.26%. Reuters said the report, which showed prices up 3.7% from a year earlier against 3.6% in its poll, lifted bets on a rate hike ahead of the Federal Reserve's October 27-28 meeting.
The Risk Premium: Credit Spreads and Equity Risk
The equity risk premium is the extra return shareholders demand over Treasuries for owning a stock. Neither it nor a company's credit spread is printed as a single daily number, but both show up in prices. With longer-term yields lower, the falls in both tables came from a higher premium on AI builders, lower expectations for their future cash flows, or both. The clearest evidence on the premium came from one company's bonds.
CoreWeave and the Price of Borrowed Money
CoreWeave sells AI computing capacity and has leaned heavily on borrowed money to build it. It carries about $50 billion of debt, and in August it raised its 2026 capital spending forecast to as much as $39 billion.
What Happened to CoreWeave's Debt
The stock fell 15.46% on Wednesday, October 14, to $65.78. That day CoreWeave's 9.75% bonds sold in April traded at 81 cents on the dollar, a yield above 15%. The cost of insuring its debt through five-year credit default swaps, contracts that pay out if a borrower defaults, had reached about 881 basis points on October 12, up from about 547 at the end of June.
On Thursday the April-issued bonds were at 79.15 cents on the dollar, and the cost of insuring the debt against default had climbed to around 1,000 basis points. That day NVIDIA chief executive Jensen Huang, whose company holds about a 10% stake in CoreWeave, told reporters in Stockholm: “Their cost of capital is actually decreasing.” The shares rose 5.94% on Thursday, then fell 11.91% on Friday to $61.39. CoreWeave said in an emailed statement: “We are confident in our backlog which more than supports all of our debt obligations.”
CoreWeave's debt and credit gauges, as reported
| Measure | Date | Level |
|---|---|---|
| Total debt | Oct 15, 2026 | about $50 billion |
| 2026 capital spending forecast | August 2026 | up to $39 billion |
| NVIDIA’s stake in CoreWeave | Oct 15, 2026 | about 10% |
| April 2026 9.75% bonds, price | Oct 14, 2026 | 81 cents on the dollar |
| April 2026 9.75% bonds, yield | Oct 14, 2026 | above 15% |
| April 2026 9.75% bonds, price | Oct 15, 2026 | 79.15 cents on the dollar |
| Five-year credit default swap | End of June 2026 | about 547 bp |
| Five-year credit default swap | Oct 12, 2026 | about 881 bp |
| Five-year credit default swap | Oct 15, 2026 | around 1,000 bp |
| CCC-rated bond spread | Early May 2026 | 9.04 percentage points |
| CCC-rated bond spread | Oct 13, 2026 | 12.67 percentage points |
| Broad US high-yield spread | Oct 13, 2026 | 3.16 percentage points |
Why Borrowing-Heavy Builders Feel Lenders' Terms First
A chip designer that funds growth from its own operating cash flow can keep spending when lenders turn cautious. A builder that funds data centers with debt must keep returning to lenders, so its credit spread feeds straight into the cost of each new project and each refinancing. Its total cost of capital can rise even in a week when Treasury yields fall. David Royal of Thrivent told MarketWatch: “A lot of these companies are borrowing relatively short, but you can't refinance it at 15%.”
Lenders usually grow selective with the weakest borrowers first, a familiar feature of how the credit cycle tightens and loosens. The wider credit market showed the same pattern: on October 13 the spread on CCC-rated bonds, among the lowest-rated in high yield, was 12.67 percentage points, up from 9.04 in early May, against 3.16 percentage points for the broad US high-yield market.
What TSMC Said About 2027
TSMC reported on Thursday, October 15: third-quarter revenue of US$46.72 billion, up 41.2% from a year earlier in US dollars, and fourth-quarter guidance of US$52.3 billion to US$54.3 billion. It raised its 2026 growth outlook to about 44% in US dollars. On 2027, chairman and chief executive C.C. Wei said consumer and price-sensitive segments “are being challenged due to the impact of rising component prices and macroeconomic uncertainties,” and added:
"As such, we are being prudent in our business planning going into 2027 while focusing on the fundamentals of our business to further strengthen our competitive position.
— C.C. Wei, Chairman and CEO, TSMC (Q3 2026 earnings call, October 15, 2026)
TSMC gave no 2027 growth figure, and chief financial officer Wendell Huang said: “It's a bit too early to share the CapEx number beyond this year's.” TSMC's ADR fell 8.98% this week, less than the chip index's 11.41%.
Memory Stocks: Micron, Sandisk and CXMT
Memory makers had run furthest this year: as of Friday, Sandisk was up 447.35% and Micron Technology 207.92%, even after falling 17.86% and 14.59% this week.
On Saturday, October 10, Cao Kanyu, president of China's ChangXin Memory Technologies (CXMT), told a Shanghai chip conference that CXMT plans a server DRAM product on a denser cell design, known as 4F², by the end of 2026, the South China Morning Post reported, as relayed by The Korea Times. CXMT gave no specifications, yields or customers. On Tuesday, October 13, 24/7 Wall St tied Micron's morning decline to the report, writing that the news “landed directly on its core server memory business,” and described Sandisk as a flash storage company with no server memory line.
DRAM, HBM and NAND in One Sentence Each
- DRAM is fast working memory that holds data while a processor uses it and loses it when the power goes off.
- HBM, or high-bandwidth memory, is DRAM stacked in layers and placed beside an AI processor so data reaches it faster.
- NAND is flash storage that keeps data without power, the kind used in solid-state drives.
Micron makes all three, CXMT makes DRAM and Sandisk makes NAND, so the CXMT report concerned a product Sandisk does not sell.
Equipment Makers: Applied Materials and Lam Research
The equipment slide began before TSMC and ASML reported. At its investor day on Tuesday, October 13, Applied Materials declined to provide an industry spending forecast, Investing.com reported, meaning a figure for wafer fab equipment (WFE), the total chipmakers spend on manufacturing tools. The stock closed that day at $464.24, down 6.69% from $497.53, and fell 19.28% for the week. Lam Research fell 17.22%.
On Wednesday, October 14, ASML chief executive Christophe Fouquet said with the company's third-quarter results: “we now expect that our supply as currently planned for both 2027 and 2028 will not fully meet the demand of our customers.”
Three Readings of the Week
The same eight sessions fit more than one explanation, and each has evidence on both sides.
One Reading: A Financing Reset
One reading is a financing reset concentrated in the most leveraged corner of AI infrastructure.
What supports it
- The largest fall came at CoreWeave, whose bonds traded at 79.15 to 81 cents on the dollar.
- In the wider credit market, the strain sat in the lowest-rated tier: a CCC spread of 12.67 percentage points against 3.16 for broad high yield.
- Longer-term Treasury yields fell, so the base rate did not rise.
- Max Frumes of 9fin told Reuters: “CoreWeave is absolutely the canary in the coal mine.”
What argues against it
- Jensen Huang said CoreWeave's “cost of capital is actually decreasing,” and CoreWeave said its backlog “more than supports all of our debt obligations.”
- Companies whose week was about products and orders rather than bonds also fell hard: Applied Materials fell 19.28% and Sandisk 17.86%, both more than the chip index.
- Parth Talsania of Equisights Research said, in comments compiled by Reuters: “We believe this is a rates event in credit clothing, set off by a hot CPI print.”
Another Reading: A Pullback After a Big Run
Another reading is an ordinary pullback after a very large run.
What supports it
- The chip index is still up 57.24% for the year, and Sandisk is up 447.35%, Micron 207.92% and Advanced Micro Devices (AMD) 146.89%.
- The S&P 500 fell only 2.04% from its October 6 close, so the selling was concentrated.
What argues against it
- Eight lower closes in a row is the chip index's longest run since at least 2021.
- A plain equity pullback does not explain bonds trading at 79.15 to 81 cents on the dollar.
- Reuters said the hot September inflation report lifted bets on a rate hike, which changed the backdrop.
A Third Reading: A 2027 Demand Question
A third reading is a demand and pricing question for 2027.
What supports it
- TSMC said it is “being prudent” in 2027 planning, as rising component prices challenge consumer and price-sensitive segments.
- Applied Materials gave no industry spending forecast.
- CXMT's server DRAM plans raised a competition question for memory makers.
- Rong Ren Goh of Eastspring Investments said, in comments compiled by Reuters: “Markets increasingly question the sustainability and trajectory of demand for computing capacity.”
What argues against it
- TSMC guided fourth-quarter revenue above its third quarter's US$46.72 billion and raised its 2026 growth outlook to about 44%.
- ASML said it expects its supply as planned for 2027 and 2028 not to fully meet customer demand.
- Reuters paraphrased Axel Rudolph of IG Group as saying investors seem to be questioning how the build-out is funded rather than reacting to a sudden drop in demand.
The three readings are not exclusive. Each can hold in part, in different proportions for different companies.
The Slide in Perspective
Even after eight lower closes, the chip index is up 57.24% for the year and 23.9% below its record close of 14,634.72 on June 22, 2026. Past performance does not guarantee future results. Not every name is up for the year: Broadcom, Oracle and CoreWeave are below their December 31, 2025 closes, and CoreWeave stands 66.56% below its record close of $183.58, set on June 20, 2025.
The week also differs from September's surge in Treasury yields, when the long end of the base rate was the story. This time longer-term yields fell while chip stocks fell, although the 10-year yield is still 91 basis points above its December 31, 2025 level of 4.18%.
For a long-term reader, the slide mostly shows how concentration works. A holding that grows faster than the rest of a portfolio takes up a larger share of it, so the same percentage fall subtracts more from the total. Single companies also swing more than a sector index: CoreWeave rose 5.94% on October 15 and fell 11.91% the next day. Position size relative to the whole portfolio decides how much a week like this changes its value.
What to Watch the Week of October 19
- Wednesday, October 21: Lam Research holds its September-quarter results call at 2:00 pm PT (5:00 pm ET). Commentary describing customers' 2027 spending plans as firm would be consistent with ASML's supply comments, while a more hesitant tone would fit the question Applied Materials left open.
- Through the week: reported prices for CoreWeave's bonds and default insurance are a direct gauge of lenders' terms for debt-funded AI builders.
- October 27-28: the Federal Reserve meets, just after the window. Bill yields reflect expectations for that decision.
Frequently Asked Questions
What is the PHLX Semiconductor Index?
It is a widely followed index of US-listed semiconductor stocks, often called the chip index. Because it is a weighted basket, a long losing streak usually points to broad selling, although its largest members carry the most weight and individual stocks can still rise on some days.
What is the cost of capital, in plain English?
It is the return investors demand before they will fund a company. Lenders want a Treasury yield plus a credit spread, and shareholders want a Treasury yield plus an equity risk premium. The higher it is, the less a company's future cash flows are worth today.
How can stocks fall when Treasury yields fall?
Treasury yields are only the base part of what investors demand. A stock can still fall if the premium investors want for owning it rises by more, or if expectations for its future cash flows drop.
What is the difference between DRAM, HBM and NAND memory?
DRAM is fast working memory that loses its data when power is cut. HBM stacks DRAM chips beside an AI processor so data moves faster. NAND is flash storage that keeps data without power, as in solid-state drives.
Why do companies that borrow heavily react more to credit conditions?
A company that funds growth with debt keeps returning to lenders, so changes in its credit spread pass quickly into the cost of each project and refinancing. A company that pays for growth from its own cash flow is less exposed to that channel.
What Changed, and What Did Not
Over eight sessions, longer-term Treasury yields fell, the yield lenders demanded from a debt-funded AI builder rose, and TSMC raised its 2026 outlook while saying it is being prudent about 2027. So if the cost of capital is to blame, it rose through the risk premium, not the base rate. What did not change: the long end of the base rate did not rise, and ASML still expects demand to exceed its planned 2027 and 2028 supply. Whether the week adds up to a financing reset, a pause after a big run or a 2027 demand question remains open.