Chip Shares Fall on AI Spending Worries Despite Upbeat Results
Semiconductor shares dropped on October 22 as investors questioned the durability of AI-related spending, even after Texas Instruments and Lam Research reported solid results. Lam Research's record revenue was offset by supply constraints and guidance that only matched expectations, while Texas Instruments showed broad demand growth across industrial, automotive, and data-center markets. The differing reactions highlighted how sensitive chip valuations have become to doubts about future AI investment.
Lam Research posted fiscal first-quarter sales of $8.22 billion, more than 54% higher than a year earlier, but supply bottlenecks constrained its near-term outlook and its quarterly forecast merely met expectations. Texas Instruments, by contrast, reported $6.06 billion in third-quarter revenue, about 28% higher year over year, with earnings of $2.62 per share versus $1.48.
Its growth spanned industrial, automotive, and data-center markets; industrial rose over 40%, automotive advanced at a mid-teens pace, and data-center revenue nearly doubled. Gross margin reached 64.2%, and management projected fourth-quarter revenue of $5.8 billion to $6.3 billion, marking a third consecutive quarter with guidance exceeding analyst estimates.
The selloff could affect ordinary investors through retirement and mutual funds holding chip stocks, while tighter equipment supply may influence how quickly chipmakers expand capacity. If AI spending doubts persist, technology users and businesses may see shifts in hardware availability and pricing, and semiconductor employees could face more cautious hiring or investment. Still, broad demand across industrial, automotive, and data-center markets may cushion some of these effects.