Chip stocks edge higher as investors look past midterm selloff and Nvidia scandal

what happened

Major chipmakers rose modestly in overnight trading on Sunday, recovering part of last week's losses. Broadcom and Micron each gained about 0.8%, Intel added 1.2%, AMD rose 1.7% and the iShares Semiconductor ETF (SOXX) gained 0.6%, Stocktwits reported. Nvidia slipped 3.5% into the red.

Nvidia's drop followed CEO Jensen Huang's admission of an improper romantic relationship with an alleged Chinese spy. The company opened an internal investigation but said it had no evidence that U.S. national secrets or its internal data were compromised. Some analysts think the episode could weigh on the stock in the near term and could cost Huang his CEO role.

Last week SOXX fell 12.2%, its worst drop in more than six years, after investors worried that the Democratic win in Congress could bring tighter rules for data centers and AI. Nvidia's next earnings report, due November 17, is expected to bring many questions on the issue.

why it matters

Data center spending remains a key source of demand for chips, power equipment and software, so the risk of tighter regulation matters for the whole sector. Nvidia's November 17 report will be the first real test for the stock after this episode.

market impact

Chips: the scandal and regulation risk weigh on Nvidia while the sector recovers part of its losses

• ▼Nvidia pressure down — scandal and possible leadership change add uncertainty ahead of earnings
• ↔SOXX mixed — the rebound runs against the threat of tighter data center regulation

tags

instruments