Customers are signing multiyear deals for chips and more: ‘That’s not what the front end of a downturn looks like’ Marvell’s stock was moving higher after a bruising chip selloff a day earlier. /iStock Artificial-intelligence stocks have stemmed the bleeding, after a selloff on Monday spurred by concerns that major model creators would start taking a more disciplined approach to AI development and spending. Among notable chip stocks on the rebound Tuesday were Qualcomm Meanwhile, shares of server and component makers were on the rise as well, with Dell Technologies **See more:**Chip stocks were a safe AI play. Now they’ve turned into the market’s pain trade.
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I can unsubscribe at any time. Even if Anthropic, OpenAI and other leading-edge labs developing frontier AI models ease their progress, Hendi Susanto, a portfolio manager at Gabelli Funds, said “second- and third-tier players will seize the opening to catch up — so demand for AI infrastructure stays high either way.” He noted that growth drivers such as inference, enterprise AI and physical AI are still ahead, and that major AI-infrastructure companies have signaled that demand will likely continue outpacing supply into at least next year. While semiconductor and semiconductor-equipment stocks are historically cyclical — meaning that they have been beholden to swings in industrywide conditions — “building and ramping new capacity takes years, not quarters,” and that should continue to support the AI trade, Susanto said in emailed comments.
Micron and other memory-chip makers have announced plans to add capacity in the next few years to meet surging demand, after being initially reluctant to do so to avoid a supply glut and price collapse. Susanto added that customers are signing multiyear supply agreements for chips, networking and other hardware, and “that’s not what the front end of a downturn looks like.” In his view, a selloff in semiconductor stocks presents an opportunity. For “high-risk, high-reward” areas of the AI trade such as next-generation optical connectivity, returns depend on meeting technology milestones, Susanto said, and that’s “why volatility and speculation there are so elevated.” were up 2.2% Tuesday after having fallen almost 6% on Monday, while Coherent shares were up 1.8% after shedding almost 13% in the previous session.
Copyright ©2026 MarketWatch, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8 Why investors need to learn the difference between uncertainty and risk in today’s market Institutional investors are dangerously overinvested in stocks Tech stocks haven’t been this cheap since the launch of ChatGPT. Gold is starting to move on something a lot bigger than inflation I retired last year with $3.4M after 31 years in law enforcement.
I’ll get $8.4K a month in income. What are my next moves for retirement? Britney Nguyen is a tech reporter covering Nvidia, chips and AI.
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