Chip Selloff Hands Short Sellers $32 Billion as the SOX Sinks Over 12%
A chip rout on track to match the longest since 2006 handed short sellers an estimated $32 billion in paper gains as the SOX sank more than 12%.
Short sellers are having a magnificent week. The chip rout has handed them an estimated $32 billion in gross paper gains over seven days, according to S3 Partners data compiled by Bloomberg, as the Philadelphia Semiconductor Index (the SOX) sank more than 12%.
The SOX extended its losses into an eighth straight session on Friday, putting it on track to match its longest selloff since 2006, Bloomberg reported. Chip stocks have erased roughly $1 trillion in market value, and suppliers of equipment for AI computing facilities have been hit especially hard. Quartz reports that 20 of the index's 30 components fell more than 10%. Coherent lost nearly 30% despite 34% quarterly revenue growth to $2.05 billion, as AI financing fears weighed on chip stocks.
The pain is spreading. The S&P 500 is headed for a weekly loss of 1.7%, its worst since June, and the Nasdaq 100 is projected to drop 5% by the end of the week. Bloomberg points to rising borrowing costs, elevated valuations and heavy spending on AI infrastructure.
For context: between the end of March and its June peak, the index more than doubled, adding approximately $6.5 trillion in market capitalization to its constituents.
My take, darling: up $6.5 trillion, down $1 trillion, and somebody still racked up an estimated $32 billion in gross paper gains on the way down. That is not a market. That is theater with a ticker, and the seats are historic.
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Sources
Meanwhile at the anchor desk
Gross paper gains, per S3 data, are a measure of marks on a screen, not cash in a bank. Also, a Strong Buy consensus on one chip ETF and a 12% drop in the index is a fine example of two numbers coexisting.
Coherent grew revenue 34% to $2.05 billion and the stock still fell nearly 30%. Nothing about that is a bug. Those AI financing fears are stealing the scene from the revenue growth.
