Chip Stocks Plunge 11%, On Pace for Their Worst Day Since 2020, as Qualcomm and Arm Crack the AI Trade

Finance
Written by Methodical Millions
Illustration of a glowing emerald microchip split by a jagged crack above a falling candlestick chart on a dark navy grid.

Weak forecasts from Qualcomm and Arm, a Democratic midterm sweep and fresh doubts about AI spending hit the market at the same time. The result is one of the sharpest one-day drops for chipmakers in years, and it spilled straight into crypto.

By Methodical Jon | Nov 5, 2026

Chip stocks fell hard on Thursday, November 5th 2026. The Philadelphia Semiconductor Index slumped 11% in late-morning trading, Reuters reported via CNA. The iShares Semiconductor ETF (NASDAQ: SOXX) was also down 11% at one point, which according to CNBC would make it the fund's worst day since the Covid-19 crash of March 2020. These are intraday moves as of late morning ET.

What happened

The broader market followed the chips down. The S&P 500 was down about 3.1% to 3.4% in late-morning trading, on track for its worst day since the April 2025 "Liberation Day" tariff shock, according to NBC News and AP. The tech-heavy Nasdaq 100 fell as much as 6.2% before recovering to a loss of about 4.5%, NBC reported. The Nasdaq Composite slipped into correction territory, more than 10% below the record it set last month, and the Dow Jones Industrial Average was down more than 1,100 points.

The losses were concentrated in the companies that sell picks and shovels for the AI buildout:

  • Qualcomm (NASDAQ: QCOM) fell about 9% to 11% after its earnings report.
  • Arm Holdings (NASDAQ: ARM) dropped about 12%, NBC reported, after sliding 15% in early trading.
  • Memory and storage names SanDisk, Western Digital, Seagate and Micron (NASDAQ: MU), along with AMD (NASDAQ: AMD), were among the S&P 500's biggest losers. CNBC had Micron and AMD down 16%.
  • Nvidia (NASDAQ: NVDA) fell 7% to 8%. NBC said that's its biggest one-day drop since April 2025.

Money moved to safety: consumer staples, health care and utilities rose, NBC said.

What Qualcomm and Arm actually said

Qualcomm slightly beat fourth-quarter earnings estimates, but CNBC reported its forecast of $2.15 to $2.35 USD in adjusted earnings per share came in below the $2.27 USD analysts expected. Handset chip sales, its biggest business, fell 26% to $5.14 billion USD, short of the $5.21 billion USD expected. Rising memory costs are pushing phone prices up. CEO Cristiano Amon put it this way: "We don't have a demand issue; it's a supply issue."

Arm beat on the quarter, with revenue up 27% to $1.44 billion USD and adjusted earnings of 52 cents per share, according to Reuters via Investing.com. But royalties, the fees it earns on every chip shipped with its designs, came in at $670 million USD versus $720.8 million USD expected. Its outlook of about $1.54 billion USD for the December quarter barely topped the $1.53 billion USD consensus, and some forecasts had been near $1.7 billion USD, CNBC-TV18 reported.

Why the AI trade is cracking

Earnings were the spark. Politics added the fuel. Democrats swept Tuesday's midterms, and many of the winners have pledged to slow or halt new AI data center construction. NBC flagged Texas, Ohio, Michigan and Georgia as markets to watch. We covered the Texas side of this on Wednesday. Fewer data centers means fewer chips, and that is the whole bull case for this group.

"Disappointing earnings and the Dem sweep potentially slowing the AI buildout are pressing sentiment," Nationwide's Mark Hackett told Reuters. Ed Yardeni was more measured with NBC: "I don't think this is an AI bubble bursting. I think it's an AI bubble losing some air very, very rapidly."

When a stock is priced for perfection, "slightly better than expected" reads as a miss.

The crypto spillover

Bitcoin traded like a tech stock. It fell below $77,000 USD on Thursday morning and touched a session low of $75,468 USD on Bitstamp by 10:55 a.m. ET, Bitcoin.com News reported. More than $1 billion USD in leveraged crypto bets were liquidated over 24 hours, mostly long positions, according to CoinGlass data cited by CoinDesk.

What to watch next

Nvidia, November 17th. Nvidia will report third-quarter results after the close, with a call at 5:00 p.m. ET. It's the biggest single test of whether AI spending is still accelerating.

The close. Late-morning numbers can change a lot by 4:00 p.m. ET.

Data center policy. Watch what newly elected governors and attorneys general actually do in January, not just what they said on the trail.

The money lesson

1. Expectations are the real benchmark. Qualcomm and Arm both beat on key lines and still fell double digits. A good company at a perfect price can still be a bad trade.

2. Concentration cuts both ways. Chips, data center names and even bitcoin all fell together today.

3. Leverage turns a bad day into a forced exit. Over $1 billion USD in crypto liquidations is what happens when borrowed money meets a fast move.

For more on why chips drive so much of the market, listen to Episode 65 - Semiconductor Shortage. It's a good companion to this story because it covers the semiconductor supply chain, and today's selloff is a reminder that chip supply and demand still move whole markets.

At the time of writing (late morning ET), U.S. markets were still open and all index and stock moves above are intraday figures that may change by the close. This article is for informational purposes only and is not financial advice.

Sources:

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This article may be AI-assisted and is subject to errors and omissions.

Methodical Millions https://methodicalmillions.com
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