Semiconductors have fallen for six straight days—is this a golden buying opportunity, or is the AI bubble starting to leak?
【Sector takeaway】Neutral to slightly bullish in the short term. Wait for TSMC’s earnings report on Thursday before adding to positions. Hardware demand hasn’t weakened; what has weakened is the market’s confidence in how long AI companies can keep burning cash.
【What happened】$SMH futures are down about 3.3% over 24h. U.S. equity ETFs fell another roughly 2% premarket, and have reportedly declined for six consecutive trading days. The Philadelphia Semiconductor Index is down about 7% cumulatively since last Wednesday’s close. Binance futures over 24h: AMD -3.6%, $TSM -3.1%, Intel -3.5%, $NVDA -1.9%.
【Why prices are falling】
1）Last Thursday, the FT reported that OpenAI’s annualized revenue in September was about $50 billion, compared with the roughly $70 billion it had previously told investors. OpenAI later confirmed the figure to The New York Times. That’s a $20 billion gap. Oracle fell more than 6% that day, and the entire AI chain was sold off.
2）On Monday, Microsoft announced an expansion of its in-house Maia 300 chip program, saying it plans to deploy more than 1 million chips by 2027. $NVDA fell in response that day.
3）Foreign investors sold Taiwan stocks heavily on Tuesday—over NT$100 billion according to Bloomberg—and the Taiwan dollar fell to a two-month low.
4）The selloff in memory stocks spread to the rest of the sector. TSMC doesn’t make memory, but it was dragged down too.
【Why you can’t look at P/E alone】Semiconductors are cyclical stocks too. Profits at AI leaders are currently at historic highs, so their P/Es look cheap—but that’s precisely when they’re most likely to be overvalued. I focus more on cash flow, capital spending, and order visibility.
【Cycle-adjusted valuation, stock by stock (based on Monday’s close)】
$NVDA: Forward P/E around 19, ROE 117%, free cash flow yield 2.3%. Outstanding earning power, but its free cash flow yield isn’t cheap; the valuation depends on growth.
$TSM: Forward P/E around 20, EV/EBITDA around 19.5, net cash around $77 billion. But $46.4 billion in capital spending ate up most of its operating cash flow, leaving a free cash flow yield of just 1.8%. The steadiest among the leaders.
Broadcom: Forward P/E around 20, EV/EBITDA 33, net debt around $35.4 billion—not cheap.
AMD: Forward P/E 53, EV/EBITDA 100, ROE just 10%. It gained 176% over the past year, making it the most sensitive to swings—and the hardest hit on the way down—in this group.
【Bull vs. bear debate】
Bulls: TSMC’s third-quarter revenue was $46.7 billion, up 50% year over year and above most expectations. ASML reportedly plans to raise prices for some parts by 10% early next year, showing the equipment side has pricing power. Rates for renting computing power are still rising.
Bears: Revenue from AI applications isn’t keeping up with capital spending, and model token prices have been cut in half since May. If cloud providers cut budgets, equipment and memory will be the first to suffer.
I’m with the bulls, but I’m only betting on the “demand hasn’t weakened” part.
【What would prove me wrong】If TSMC cuts its Thursday guidance or capital spending, or if $SMH 4H closes below 580 and can’t reclaim it, I’m wrong—I won’t buy the dip.
【Catalysts】ASML earnings on Wednesday; TSMC earnings on Thursday (before the market opens; consensus expects net profit to rise about 65% year over year to NT$746.3 billion, marking a sixth consecutive record quarter). Earnings season for major banks also starts tonight.
【Ranking】$TSM > $NVDA > Broadcom > AMD. If you’re using an ETF, $SMH is safer than betting on a single stock.
【Trading plan】On the chart, 580 is the low for this 4H move, 603 is the consolidation zone from last Friday to Monday, and 640 is the previous high. Don’t chase premarket. After the open, watch whether it can hold 580. Keep positions light ahead of earnings; don’t go all in, and definitely don’t use a 3x leveraged ETF.
Do you think this is the first cut into the AI bubble, or an unjustified selloff ahead of earnings? I think it’s an unjustified selloff. See you in the comments 👇
⚠️Just my personal ramblings; this is not investment advice.
#半导体 #美股 #AI芯片
$SMH $NVDA $TSM
【Sector takeaway】Neutral to slightly bullish in the short term. Wait for TSMC’s earnings report on Thursday before adding to positions. Hardware demand hasn’t weakened; what has weakened is the market’s confidence in how long AI companies can keep burning cash.
【What happened】$SMH futures are down about 3.3% over 24h. U.S. equity ETFs fell another roughly 2% premarket, and have reportedly declined for six consecutive trading days. The Philadelphia Semiconductor Index is down about 7% cumulatively since last Wednesday’s close. Binance futures over 24h: AMD -3.6%, $TSM -3.1%, Intel -3.5%, $NVDA -1.9%.
【Why prices are falling】
1）Last Thursday, the FT reported that OpenAI’s annualized revenue in September was about $50 billion, compared with the roughly $70 billion it had previously told investors. OpenAI later confirmed the figure to The New York Times. That’s a $20 billion gap. Oracle fell more than 6% that day, and the entire AI chain was sold off.
2）On Monday, Microsoft announced an expansion of its in-house Maia 300 chip program, saying it plans to deploy more than 1 million chips by 2027. $NVDA fell in response that day.
3）Foreign investors sold Taiwan stocks heavily on Tuesday—over NT$100 billion according to Bloomberg—and the Taiwan dollar fell to a two-month low.
4）The selloff in memory stocks spread to the rest of the sector. TSMC doesn’t make memory, but it was dragged down too.
【Why you can’t look at P/E alone】Semiconductors are cyclical stocks too. Profits at AI leaders are currently at historic highs, so their P/Es look cheap—but that’s precisely when they’re most likely to be overvalued. I focus more on cash flow, capital spending, and order visibility.
【Cycle-adjusted valuation, stock by stock (based on Monday’s close)】
$NVDA: Forward P/E around 19, ROE 117%, free cash flow yield 2.3%. Outstanding earning power, but its free cash flow yield isn’t cheap; the valuation depends on growth.
$TSM: Forward P/E around 20, EV/EBITDA around 19.5, net cash around $77 billion. But $46.4 billion in capital spending ate up most of its operating cash flow, leaving a free cash flow yield of just 1.8%. The steadiest among the leaders.
Broadcom: Forward P/E around 20, EV/EBITDA 33, net debt around $35.4 billion—not cheap.
AMD: Forward P/E 53, EV/EBITDA 100, ROE just 10%. It gained 176% over the past year, making it the most sensitive to swings—and the hardest hit on the way down—in this group.
【Bull vs. bear debate】
Bulls: TSMC’s third-quarter revenue was $46.7 billion, up 50% year over year and above most expectations. ASML reportedly plans to raise prices for some parts by 10% early next year, showing the equipment side has pricing power. Rates for renting computing power are still rising.
Bears: Revenue from AI applications isn’t keeping up with capital spending, and model token prices have been cut in half since May. If cloud providers cut budgets, equipment and memory will be the first to suffer.
I’m with the bulls, but I’m only betting on the “demand hasn’t weakened” part.
【What would prove me wrong】If TSMC cuts its Thursday guidance or capital spending, or if $SMH 4H closes below 580 and can’t reclaim it, I’m wrong—I won’t buy the dip.
【Catalysts】ASML earnings on Wednesday; TSMC earnings on Thursday (before the market opens; consensus expects net profit to rise about 65% year over year to NT$746.3 billion, marking a sixth consecutive record quarter). Earnings season for major banks also starts tonight.
【Ranking】$TSM > $NVDA > Broadcom > AMD. If you’re using an ETF, $SMH is safer than betting on a single stock.
【Trading plan】On the chart, 580 is the low for this 4H move, 603 is the consolidation zone from last Friday to Monday, and 640 is the previous high. Don’t chase premarket. After the open, watch whether it can hold 580. Keep positions light ahead of earnings; don’t go all in, and definitely don’t use a 3x leveraged ETF.
Do you think this is the first cut into the AI bubble, or an unjustified selloff ahead of earnings? I think it’s an unjustified selloff. See you in the comments 👇
⚠️Just my personal ramblings; this is not investment advice.
#半导体 #美股 #AI芯片
$SMH $NVDA $TSM