Twenty AI Chip Giants Lost $1 Trillion. BofA Says They’re Priced Like Post-Crash Cisco

Quick take: Chip stocks are on track for an eighth straight daily decline, and Bank of America says the group now trades at about 13x forward earnings, roughly where Cisco traded after the dot-com crash. Its argument: investors are paying a post-crash price for a cycle that has not crashed.

What happened

By Friday morning (around 10:24 a.m. ET) the Philadelphia Semiconductor Index (SOX) was down about 9% for the week and roughly 22% below its 22 June record close. A 20% fall is the usual bear-market line, and this would be the second such episode this year: the index dropped 28.6% between 22 June and 29 July before recovering. Reports say twenty of the world’s most valuable AI and chip stocks shed more than $1 trillion in market value through Thursday.

Two triggers keep coming up. First, China’s memory maker CXMT announced a server-memory product on a new architecture, raising share-loss fears for Samsung, SK Hynix and Micron. Second, hotter-than-expected inflation data this week revived worries about further Fed rate hikes. Micron is down 13.1% on the week to around $894 after a record close of $1,088 on 7 October; Broadcom is down 6.5% and Nvidia 5.7%. Money has also been leaving AI-linked credit: CoreWeave was down 7.6% at the same point, with its bond yields above 15%.

The Cisco comparison

In a note dated Friday, Bank of America analyst Vivek Arya noted that Nvidia, Broadcom and Micron average about 13x forward earnings, versus 10x to 20x for Cisco after the 2000 bubble burst. Cisco peaked at $82 in March 2000, fell to $8.12 by October 2002 and only regained that peak in March 2026, a reminder of how long a bad entry point can take to heal.

Arya’s counter-case, in paraphrase: today’s AI hardware runs near full utilisation rather than sitting idle like the dot-com “dark fibre,” rental prices for older Nvidia chips are up 12% to 37% this year, and weekly OpenRouter usage reached about 170 trillion tokens in early October, versus roughly 3 trillion a year earlier. He projects cloud and neocloud capex near $1.01 trillion in 2026 and $1.39 trillion in 2027. The risks he lists: a credit event at a neocloud, higher rates, and power or permitting delays.

Key numbers

Dow about 52,400 (+0.4%), at a one-month high on bank gains; S&P 500 about 7,737 (-0.1%); Nasdaq about 26,527 (-0.7%), mid-morning.
S&P 500 IT sector down 0.9%, the biggest drag; Micron down 3.9% and AMD down 3.3% at the same point.
S&P 500 and Nasdaq were set for weekly losses; the Dow was set for a weekly gain.
Brent near $105 and the 10-year Treasury yield near 5.1%, per mid-morning summaries.

What to watch next

Whether the SOX stabilises above the bear-market threshold, any further credit stress at AI-infrastructure borrowers, and the Fed’s next meeting in two weeks. Fed Chair Kevin Warsh gave no explicit rate signal in Bangkok but described the economy as resilient and supported by an AI-driven investment boom. UBS has called the move more a recalibration of expectations than a break in the AI story, while others see a possible inflection point, so the debate is open.

Impact on Indian markets

A prolonged global chip and AI sell-off tends to weigh on risk appetite across Asia. South Korea’s Kospi fell more than 7% in the same rout, so foreign flows into emerging markets, including India, can turn cautious. India’s IT services names are not chipmakers, but they are sensitive to US tech sentiment and to higher-for-longer US yields.

Sources

Disclaimer: This post is for educational and informational purposes only and is not investment advice. Consult a licensed financial advisor before investing.

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