The iShares Semiconductor ETF (SOXX) fell about 17% in October, leaving it nearly 28% below its June 22 peak of $655 at the October 30 close. Intel’s third-quarter results and weaker-than-expected fourth-quarter guidance intensified the sell-off, while moving averages pointed to fading momentum. Technology earnings have generally held up and growth expectations for 2027 remain strong, but investors are weighing stretched valuations against the risk of a deeper pullback.
A decade of outsized gains raises the bar for chipmakers
Over the past decade, some semiconductor stocks have far outpaced major technology companies. AMD gained about 7,000%, Micron Technology rose roughly 5,000% and Marvell Technology advanced about 1,500. By comparison, Microsoft gained around 770%, Alphabet 600%, Amazon 510% and Meta 370%. Those gains leave chipmakers facing high expectations for earnings and growth guidance.
The gap remains substantial over five years. Micron rose more than 1,100%, while Alphabet gained about 89%. Over the same period, the technology index advanced roughly 80% and the broader market index about 64%. The contrast with larger, more established technology companies has put a sharper focus on differences in valuation, earnings stability and business mix within the sector.
Intel’s outlook puts margins and cash flow in focus
Intel reported third-quarter revenue of $16.51 billion, slightly below analysts’ $16.56 billion estimate. Its outlook drew greater attention: the company forecast fourth-quarter revenue of $15 billion to $16 billion, below the roughly $17 billion analysts had expected. Its earnings-per-share forecast fell to $0.25 from $0.43.
Intel also expects gross margin to decline to 38% in the fourth quarter from 44.1% in the third, a drop of about 600 basis points. The company cited higher manufacturing costs and supply-chain prices. Its chief financial officer said Intel expects negative cash flow in 2027, with capital spending of about $20 billion.
Intel’s traditional PC processor business remains weak, while its foundry division is still loss-making. The division recorded a $1.9 billion loss in the third quarter as it seeks to build a chip manufacturing business and compete with TSMC. The progress of Intel’s restructuring and manufacturing efforts therefore matters beyond the company itself, drawing attention to the costs, margins and returns involved in expanding U.S. chip production.
Intel accounts for about 8.1% of SOXX, the ETF’s second-largest holding after AMD at roughly 9.5%. Intel shares fell about 30% on October’s final trading day, weighing on the fund and sector sentiment. But Intel’s operational challenges are company-specific and should not be taken as a measure of the entire semiconductor industry. Results from other AI-related companies have generally remained steady, although some growth guidance has slowed.
AMD and Qualcomm results will test expectations
Investors are now looking to AMD, SOXX’s largest holding, which is expected to report results next Tuesday. Qualcomm is scheduled to report on Thursday. Their results will offer fresh indications of chip demand, growth guidance and margin trends. Even strong earnings could leave the sector under pressure if they fall short of elevated expectations; steady guidance, by contrast, could ease concerns about a broader slowdown.
The semiconductor industry’s rapid growth cannot continue indefinitely. Slower growth and margin pressure have emerged in memory, prompting investors to reassess earnings quality across different parts of the chip supply chain. A key question is how much of the current weakness reflects Intel’s transition challenges and how much signals a wider shift in the industry cycle.
Moving averages point to a weak near-term trend
On the weekly chart, SOXX ended the final week of October down about 1.4%, after falling nearly 10% at one point during the week. The ETF tested its 10-week simple moving average but failed to hold above it, leaving the average as resistance. Earlier, the 10-week average crossed below the 21-week average, a signal associated with weakening momentum in this technical framework.
Past performance offers context, though not a forecast. From August 2024 to June 2025, the 10-week average stayed below the 21-week average for about 10 months. SOXX took roughly 14 to 15 months to return to its previous high. The fund is now about four months removed from its $655 peak and about two months from the moving-average crossover. The earlier episode does not mean the same pattern will repeat, but it shows that a recovery from elevated levels can take time.
On the daily chart, SOXX rebounded for several sessions near its 200-day moving average before falling again. It closed below that level on Friday, down more than 8% for the day. Together, the daily and weekly signals point to near-term technical weakness. If the decline continues, chart watchers may look to the 50-week moving average near $466 as a reference level; it is a technical marker, not a prediction of where the ETF will trade.
Rates and economic data remain key variables
Interest rates and macroeconomic data also shape valuations for growth stocks. The analysis cited a U.S. 10-year Treasury yield of about 5% and a Federal Reserve tightening cycle, conditions that increase the discount rate applied to future cash flows and can weigh on highly valued assets. At the same time, economic growth, corporate investment and earnings have not shown signs of a broad crisis. Further easing in inflation and lower uncertainty could improve the backdrop for semiconductor shares.
Seasonal patterns are also cited as a possible source of support, but they do not replace scrutiny of economic fundamentals, company results and price action. The central question is whether slower industry growth is part of a normal maturation process or the start of a further reset in expectations. Intel’s guidance, upcoming results from AMD and Qualcomm, and SOXX’s ability to reclaim key moving averages will provide new evidence for assessing the sector.