After leading the market for most of the year, the selloff in the semiconductor space has become not just notable – it’s one of the worst selloffs ever.
In the past 20 years, the only times semiconductors have performed this badly relative to the market were during the 2008 lows, the 2022 bear market lows, and right at the worst of the “Liberation Day” selloff in 2025:
What’s happening now? There are fears about the pace of AI spending. There are concerns over the level of debt being used to back parts of the AI story, from data center buildouts to renting out Nvidia GPUs.
But there’s one other key component to the story.
It’s capacity.
Simply put, chip demand is off the charts. Companies that manufacture or design chips just can’t keep up right now.
That’s the bullish tell. And the sign that the slowdown in the AI boom is a ways off. It’s when there’s overcapacity that there’s a problem.
~ Addison
P.S. Are your trading accounts set and taxes organized before the end of 2026?
With the end of 2026 in sight, now’s the time to make some year-end moves that could significantly save on your taxes, so we’ll also be hosting our friend Nick Buhelosfrom Prime Corporate Services on Thursday, October 22 at 1 p.m. ET.
Nick will show you how to legally minimize your taxes with smart, strategic planning — including using your membership in the Grey Swan Investment Fraternity as a tax-deductible expense against your investment gains.
