What Happened?
A number of stocks fell in the morning session after the AVGO earnings overhang and the stronger-than-expected jobs report combined to drive one of the broadest global chip selloff of the year.
The damage spread globally: South Korea's Kospi fell 5.5%, with Samsung down 6.4% and SK Hynix nearly 10%. European names followed: ASML fell 3.8% and Infineon lost more than 6%. Broadcom's guidance miss reset expectations for the pace of hyperscaler AI chip spending, removing the sector's most visible growth catalyst.
The 172,000-payroll print then eliminated near-term rate cut hopes and introduced rate hike risk by year end per CME FedWatch. Semiconductor valuations, built on aggressive multi-year earnings assumptions, are acutely sensitive to these discount rate movements.
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 Entegris (NASDAQ: ENTG) fell 5.9%. Is now the time to buy Entegris? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company KLA Corporation (NASDAQ: KLAC) fell 6%. Is now the time to buy KLA Corporation? Access our full analysis report here, it’s free.
Zooming In On KLA Corporation (KLAC)
KLA Corporation’s shares are very volatile and have had 22 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 10 days ago when the stock gained 6.6% as Micron's blowout day signaled that AI-driven chip demand is structurally undersupplied which is bullish news for the equipment makers and foundries that build the capacity.
Semiconductor manufacturing equipment (Applied Materials, Lam Research, KLA, ASML) and foundries (TSMC, GlobalFoundries) benefit when chip companies announce capacity expansions. Every dollar of additional Micron capex flows to the equipment makers that supply the tools, and every new fab Micron builds is a multi-year revenue stream for the foundries that share processes. UBS estimated Micron will spend $50B+ on capacity over the next 5 years. At industry-average tool intensity, that's billions of equipment orders.
KLA Corporation is up 56.5% since the beginning of the year, and at $1,995 per share, it is trading close to its 52-week high of $2,131 from June 2026. Investors who bought $1,000 worth of KLA Corporation’s shares 5 years ago would now be looking at an investment worth $6,263.
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