What happened?
A number of stocks fell in the afternoon session after U.S. midterm results shifted control of Congress and the Texas governorship, raising concern over a prospective data-center buildout pause and an end to buildout tax incentives in that state.
Texas accounts for roughly 27% of planned U.S. data-center gigawatts, Wells Fargo estimated in figures carried by CNBC. CNBC reported Associated Press projections that both chambers of Congress would change hands, with investors focused on a possible construction pause in Texas. The declines came as the broader market advanced.
Chip stocks were already under strain after the Nasdaq-100 fell into correction territory in late October, as worries grew that data-center spending growth was slowing, CNBC reported.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Semiconductor manufacturing company Semtech (NASDAQ: SMTC) fell 13%. Is now the time to buy Semtech? Access our full analysis report here, it’s free.
- Analog semiconductors company MACOM (NASDAQ: MTSI) fell 9%. Is now the time to buy MACOM? Access our full analysis report here, it’s free.
Zooming in on Semtech (SMTC)
Semtech’s shares are extremely volatile and have had 80 moves greater than 5% over the last year. But moves this big are rare even for Semtech and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 5.4% on the news that investors returned to major chipmakers following steep previous-session declines and an aggregate $3.7 trillion sell-off sparked by concerns over artificial intelligence spending and neocloud debt. As reported by CNBC, the rebound brought relief across the semiconductor landscape, lifting key players including Nvidia, AMD, and Intel alongside the broader Philadelphia Semiconductor Index.
The sector had faced intense downward pressure in prior sessions, weighed down by growing skepticism surrounding massive corporate outlays on artificial intelligence infrastructure and the sustainability of neocloud debt, which refers to financing raised by specialized cloud providers to purchase advanced computing hardware. Despite these ongoing questions about the ultimate returns on enterprise AI spending, bargain hunters and institutional buyers stepped back into the market to scoop up shares at more attractive valuations after the historic retreat.
Semtech is up 47.7% since the beginning of the year, but at $111.19 per share, it is still trading 43.6% below its 52-week high of $197.20 from October 2026. Investors who bought $1,000 worth of Semtech’s shares 5 years ago would now be looking at an investment worth $1,222.
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