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Semiconductors Sector Faces Sharp Pullback Despite Firm AI Momentum — November 4, 2025


TMU Research
2025-11-04

The semiconductor sector endured a sharp drawdown on November 4, 2025, with SOXX closing at 295.85, down 4.06%, even as attention and sentiment remained notably elevated. Sector attention held at 5%, comfortably above the 2% prominence threshold, while sentiment registered a still-bullish 5.3 on the −10 to +10 scale.

Although sentiment softened from the peak levels seen between October 28 and October 31, the AI infrastructure cycle remained strong, with AMD, Nvidia, Qualcomm, Microsoft, and major data-center operators driving headlines. The market decline was driven more by valuation compression and earnings-driven volatility than by any structural deterioration in industry fundamentals.

Attention Trend (Oldest → Newest)

Sentiment Trend (Oldest → Newest)

Stock Performance

The semiconductor sector sold off sharply as the market reassessed valuations after an intense multi-week AI-driven rally. The decline was most visible in Nvidia and AMD, both of which had been sector leaders throughout October. MarketWatch highlighted that Nvidia was among the primary detractors dragging major indices lower, signaling profit-taking more than a change in fundamental momentum.

Super Micro’s post-earnings selloff added pressure, with CNBC reporting slumping sales and weaker-than-expected earnings. Because Super Micro is tied closely to AI server demand, its drop reinforced market concerns that expectations may have temporarily run ahead of near-term delivery capacity.

Industry Trends

AI infrastructure remained the dominant macro-driver. Bloomberg reported that Microsoft’s neocloud spending has now exceeded $60 billion, including access to 200,000 Nvidia GB300 chips via Nscale. This is a major commitment that reinforces the multi-year buildout cycle for compute-dense facilities.

Meanwhile, global data-center expansion continued at breakneck pace. Bloomberg highlighted new Nvidia-backed data-center projects across Europe and major investments in Portugal’s AI and cloud infrastructure. Amazon and TikTok-related hyperscale initiatives also advanced globally.

Conversely, Yahoo Finance cited an AlixPartners survey warning of potential industry distress if demand outstrips actual long-term capacity or grid stability — a risk reflected in disputes between Amazon and utilities over data-center power access.

Product and Service Development

Skyworks reported strong outlook and robust RF chip demand tied to Apple’s latest iPhone cycle. The shift toward AI-enhanced mobile designs is lifting suppliers across the RF and connectivity stack.

Parallel innovation emerged in consumer hardware: Forbes covered the launch of Rolling Square’s new modular lifetime-warranty cable system, indirectly reinforcing the broader ecosystem benefits from semis-driven accessory markets.

Strategic Investment

Major strategic moves dominated the day. Microsoft announced three major AI infrastructure deals in a single day, demonstrating intense capacity-building in the race to service enterprise AI workloads.

IREN — traditionally a bitcoin miner — secured a $9.7B AI data-center deal with Microsoft, showing how alternative compute operators are pivoting into the AI cloud value chain.

Nvidia also expanded its European footprint via a new €1 billion data-center project with Deutsche Telekom, according to Bloomberg.

Partnerships

Qualcomm received a bullish boost after a JPMorgan analyst projected the company will supply 90% of modem chips for Apple’s iPhone 17 lineup. This strengthens Qualcomm’s mobile leadership while providing stability as AI computing priorities shift device requirements.

Rigetti’s CEO emphasized that quantum computing will be a key theme for 2026 and beyond — an emerging niche that remains closely aligned with semiconductor capability roadmaps.

Earnings Outlooks

AMD dominated the earnings narrative. Across multiple reports (CNBC, Yahoo Finance, Benzinga, Investopedia), the company delivered record Q3 results driven by explosive AI data-center demand. Revenue hit $9.25B, surpassing expectations, and guidance topped consensus.

Analysts emphasized that AMD is increasingly positioned as a credible competitor to Nvidia in AI accelerators, even though it continues to face challenges in China due to export restrictions.

Analyst Opinions

TheStreet reported a jaw-dropping new price target on Nvidia from a top analyst, further validating that long-term AI infrastructure spending remains intact despite near-term market volatility.

BofA’s Vivek Arya similarly argued that AMD is “exceptionally positioned” heading into 2030, citing the early stages of a multi-year AI supercycle.

Meanwhile, skepticism persists in some corners: Barron's noted renewed concerns about stretched AI valuations — a contributing factor to the day's sector pullback.



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