The election gave Wall Street a reason to buy almost everything. Chip stocks are the exception, and they’ve lost nearly $4 trillion in value since early October.
Democrats’ sweep of both chambers of Congress sent the Dow Jones Industrial Average (^DJI) up 3% on Wednesday, its best day since the April 9, 2025, rally that followed President Trump’s pause on his “Liberation Day” tariffs. Roughly three out of every four S&P 500 (^GSPC) stocks rose in a rally few expected.
Apple (AAPL) and Berkshire Hathaway (BRK-B) closed at records. Airlines, homebuilders and retailers jumped as oil fell below $90 a barrel on bets that the war in Iran is winding down. Home Depot (HD) and Lowe’s (LOW) had their best days since November 2022.
Chips went the other way. The PHLX Semiconductor Index (^SOX) fell 3% Wednesday, deepening the new bear market it entered Monday, and chip stocks slid again in premarket trading Thursday after Qualcomm’s outlook fell short.
The election didn’t start this rotation. It sped it up.
In October, the S&P 500 fell just 0.9%, but “rotation within the market was dramatic,” BofA equity strategist Savita Subramanian wrote in a BofA Global Research report. Some 76% of S&P 500 stocks beat the index, the best breadth in BofA’s data back to 1986, and the equal-weight S&P 500 (^SP500EW) beat the regular index by the widest margin since April 2009.
The damage in chips is enormous. Since Nvidia’s (NVDA) record close on Oct. 6, 29 major chip stocks have lost about $3.8 trillion in market value through Wednesday, according to Yahoo Finance calculations. Nvidia alone has shed about $940 billion. Over the same stretch, the other 474 stocks in the S&P 500 and Nasdaq-100 gained about $1.5 trillion.
Washington is adding to the pressure. Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez have pushed a moratorium on new AI data centers, and their party now controls both chambers. The VanEck Semiconductor ETF (SMH) has also fallen below the $520 level BofA’s Michael Hartnett flagged as one chip bulls needed to hold.
“How do you stay in the AI trade through all the whipsaws and the roller coaster and not get seasick? You have to actually own a barbell,” Drew Pettit, chief investment strategist at Roundhill Investments, said on Yahoo Finance on Wednesday.
Value stocks are finally having their moment
The clearest read on the rotation is value versus growth. The iShares Russell 1000 Value ETF (IWD) is up about 26% this year, while the iShares Russell 1000 Growth ETF (IWF) is roughly flat. Since early October, value has gained about 6% while growth has dropped about 8%.
