Chip Stocks Just Had Their Longest Losing Streak Since 2008. Should You Buy Nvidia Stock Now?
Chip Stocks Just Had Their Longest Losing Streak Since 2008. Should You Buy Nvidia Stock Now?
Chip stocks just had a tough two weeks. The PHLX Semiconductor Index, a widely followed measure of chip stocks, slid for eight straight trading sessions from Oct. 7 through Friday, Oct.
16. In that span the index dropped around 16%. Going by daily closing prices, it hadn't fallen so many days in a row since October 2008.
Nvidia (NVDA +1.38%) did better than the index but still slid about 10%, from a record close of $239.24 on Oct. 6 to $214.13. The sell-off came as worries over interest rate hikes, the financing behind artificial intelligence (AI) projects, and competition weighed on chip stocks worldwide.
The index bounced about 1.6% on Monday as of this writing. But after a fall like this, should investors buy Nvidia stock now or wait? Four gains, two losses But the other two cases were ugly.
A year after the May 2002 streak, the stock was down 31%. A year after the streak that ended in January 2008, it was down 69%. What separated the winners from the losers?
Notably, both losing cases came before the worst of a long downturn in chip stocks. Measured the same way, the index itself was down another 22% a year after the May 2002 streak and another 38% a year after the one that ended in January 2008. The two biggest gains came late in those same downturns.
The index bottomed only around two weeks after the September 2002 streak ended, and about six weeks after the October 2008 streak. The 2006 streaks, meanwhile, came in a pullback that didn't last, and the index was up 4% and 13%, respectively, in the next 12 months. In other words, the streak itself didn't tell investors much.
What counted was where chip stocks were in a bigger downturn, and that was only clear looking back. Nvidia's sales are still rising fast That's why I'd focus on the business rather than the chart. And Nvidia's numbers don't look like those of a company heading for a slump, at least not yet.
Showing how strong demand for its chips remains, Nvidia's revenue in the second quarter of fiscal 2027 (the period ended July 26, 2026) surged 106% year over year, to $96.2 billion. That was an acceleration from 85% growth in fiscal Q1. Operating income climbed 124% from the year-ago quarter, to $63.7 billion.
What's more, management guided for fiscal third-quarter revenue of $108 billion, plus or minus 2%, against $57.0 billion the year before. At the midpoint, that's growth of around 89% — slower than in the second quarter, but still nearly 90%. Of course, the worries driving this sell-off could become something bigger.
If higher rates or tighter financing lead big customers to slow their data center spending, Nvidia's growth could cool fast. But so far, the company's own results don't show that happening. Meanwhile, at around $217 as of this writing, Nvidia's stock trades at about 14 times the expected earnings for its fiscal 2028 (which ends in January 2028), using Wall Street's average estimate.
Arguably, investors paying that price are already expecting growth to slow from here. Does the losing streak make Nvidia stock a buy? Not by itself.
In 2002 and early 2008, a drop like this turned out to be an early step in a far deeper decline in chip stocks. But I think Nvidia's growth and its price make the stock worth a look today. Given how those two early streaks went, though, I'd probably buy in stages over a few months rather than all at once.