Last week, we saw the largest single drop in semiconductor stock prices since the COVID crisis.
The iShares Semiconductor ETF dropped more than 7%..
And hot picks like ASML, Camtek, Celestica, and Advanced Micro Devices...
All dropped nearly 10% or more.
It started when the Biden administration leaked their plans to propose stricter controls on the sale of semiconductors to China.
Even with him out of the race, he has 6 months to put these policies into effect.
And in the same week, Trump implied he might not support Taiwan in the event of a Chinese invasion.
Combined, these two pieces of news made chip investors very risk averse. That’s why they sold last week.
But this was a gross overreaction.
I believe last week was just geopolitical hot air.
The chip industry isn’t dead and there’s every reason to believe demand will continue accelerating.
History has shown that presidents are all bark and no bite when it comes to trade wars.
While some policies may be implemented, they will have little effect compared to the sharp increase in demand for chips.
Which is why even after last week’s drop, the iShares Semiconductor ETF is still up almost 50% over the past year.
I expect quarterly earnings announcements to come in strong.
And when that happens, chip stocks will likely spike back into the stratosphere again.
Which makes last week a great setup for what could be a massive rebound in some of the best AI stocks.
And to figure out which stocks I’m talking about, you can watch my free video explaining my current thesis… and what to watch for in the coming months.
You can watch it here.
Sincerely,
Luke Lango
Senior Investment Analyst, InvestorPlace
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