What Happened?
A number of stocks fell in the afternoon session after semiconductor stocks pulled back following a rally the previous week as geopolitical tensions between the US and China increased over artificial intelligence technology.
The contest over AI entered a more confrontational phase after China ordered Meta to unwind its $2 billion acquisition of the AI startup Manus, citing national security concerns. This move was seen as a direct intervention to limit foreign access to its advanced technology sector.
Adding to the friction, the White House accused China of stealing American AI technology on an "industrial scale" and has warned of intensified crackdowns. This struggle over talent, intellectual property, and strategic technologies created significant uncertainty for companies operating in the global AI landscape, as national interests increasingly dictate corporate activity.
Contributing to the weakness was the continued concerns over global supply chain disruptions stemming from the conflict involving the US, Israel, and Iran. The crisis also led to higher raw material costs for a wide variety of industries. This geopolitical instability is raising concerns among investors about potential production delays and increased operational costs for technology hardware companies.
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 Lam Research (NASDAQ: LRCX) fell 3.6%. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
- Analog Semiconductors company Vishay Intertechnology (NYSE: VSH) fell 1.9%. Is now the time to buy Vishay Intertechnology? Access our full analysis report here, it’s free.
Zooming In On Lam Research (LRCX)
Lam Research’s shares are very volatile and have had 27 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 3 days ago when the stock gained 4.9% on the news that the company reported record-setting third-quarter financial results that surpassed analyst expectations and provided a strong outlook for the future.
Lam Research posted revenue of $5.84 billion, a figure that grew by double-digits both sequentially and year-over-year. The strong performance was driven by high demand from foundry and memory customers for its chip-making tools. Bolstering investor confidence, the company offered strong guidance for the next quarter, projecting revenue and earnings well above prior estimates.
Management also raised its 2026 forecast for industry-wide Wafer Fabrication Equipment (WFE) spending to $140 billion, signaling accelerating demand largely fueled by AI. This positive industry trend was supported by a separate report from Omdia, which significantly raised its 2026 semiconductor revenue forecast due to a global memory crunch. Financially, Lam Research also returned about $800 million to shareholders through buybacks and dividends.
Lam Research is up 39.7% since the beginning of the year, and at $258.56 per share, it is trading close to its 52-week high of $272.41 from April 2026. Investors who bought $1,000 worth of Lam Research’s shares 5 years ago would now be looking at an investment worth $4,010.
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