US chip stocks post longest selloff since 2006; short sellers up $3.2B
The Philadelphia Semiconductor Index fell more than 12% over the past seven sessions, handing investors who shorted chip stocks an estimated $3.2 billion in paper gains, according to S3 Partners data cited by Bloomberg. The index declined for an eighth straight session on Oct. 16, on track to match its longest losing streak since 2006, with 20 of its 30 components down more than 10% — Coherent dropped nearly 30%, while Astera Labs, MACOM and Credo Technology each fell over 20%. Worries about higher rates, stretched valuations and the vast scale of AI infrastructure spending pushed the S&P 500 toward a 1.7% weekly loss and the Nasdaq 100 toward a 5% drop; traders shorting AI cloud provider CoreWeave gained more than $1 billion on paper this week, and credit default swap pricing implies a better-than-50% chance of default within five years.
The selloff signals that investors are starting to question the payback timeline for AI infrastructure spending, leaving chip and AI cloud valuations more dependent on real compute demand.