What Happened?
A number of stocks fell in the afternoon session after chip stocks sold off in a session that laid bare the structural tension building beneath the sector's recent rally.
Bank of America's fund manager survey, released in the morning, showed that 80% of respondents viewed semiconductors as the most crowded trade, the highest reading in the survey's history. When that many professional investors are simultaneously aware they are overweight the same position, the incentive to move first is powerful.
The exit had additional urgency from two macro reads. May import prices came in at 1.9%, nearly double the 1.1% consensus, with an annual gain of 6.7%, the largest since August 2022. The data complicated the narrative that the Iran peace deal had resolved the inflation problem. The market was also anticipating Kevin Warsh's first meeting as Federal Reserve Chair, with some fund managers expecting a hawkish hold.
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:
- Processors and Graphics Chips company Qorvo (NASDAQ: QRVO) fell 4.1%. Is now the time to buy Qorvo? Access our full analysis report here, it’s free.
- Analog Semiconductors company onsemi (NASDAQ: ON) fell 4.7%. Is now the time to buy onsemi? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Lam Research (NASDAQ: LRCX) fell 4.7%. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
Zooming In On onsemi (ON)
onsemi’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 5.1% as the Trump administration announced a new peace deal that would lead to the reopening of the Strait of Hormuz, signaling a potential recovery in the industrial and automotive end markets that analog chips are most directly tied to.
Unlike digital processors and AI chips, analog semiconductors convert real-world signals — temperature, pressure, speed, current — into data. Their customers are automakers, industrial equipment manufacturers, energy infrastructure operators, and factory automation providers.
All of these end markets had slowed as supply chains stalled and capital spending was deferred after the Hormuz blockade began. With the strait preparing to reopen and global industrial activity expected to recover, the order pipeline for analog makers begins to rebuild. The 10-year yield falling to its lowest level since mid-May added a macro re-rating on top of the underlying demand recovery as a cheaper rate environment makes the industrial capital expenditure that drives analog demand more financially viable.
onsemi is up 111% since the beginning of the year, but at $119.56 per share, it is still trading 10.7% below its 52-week high of $133.93 from June 2026. Investors who bought $1,000 worth of onsemi’s shares 5 years ago would now be looking at an investment worth $3,206.
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