Power Integrations and Microchip Technology Shares Plummet, What You Need To Know

What Happened?

A number of stocks fell in the afternoon session after the AVGO earnings overhang and the stronger-than-expected jobs report combined to drive one of the broadest global chip selloff of the year.

The damage spread globally: South Korea’s Kospi fell 5.5%, with Samsung down 6.4% and SK Hynix nearly 10%. European names followed: ASML fell 3.8% and Infineon lost more than 6%. The mechanism is two-fold. Broadcom’s guidance miss reset expectations for the pace of hyperscaler AI chip spending, removing the sector’s most visible growth catalyst. The 172,000-payroll print then eliminated near-term rate cut hopes and introduced rate hike risk by year end per CME FedWatch. Semiconductor valuations, built on aggressive multi-year earnings assumptions, are acutely sensitive to these discount rate movements.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

Zooming In On Power Integrations (POWI)

Power Integrations’s shares are very volatile and have had 27 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 18 days ago when the stock dropped 9.3% after a broad-based sell-off hit the semiconductor sector following news of a potential strike at Samsung and a stake sale by Taiwan Semiconductor Manufacturing (TSMC), which rattled global chip supply chains.

These events highlighted significant supply-chain risks, triggering a sharp reversal across the chip industry. Adding to the sector’s weakness were rising valuation concerns, inflation fears, and broader market jitters that led to renewed selling pressure on major companies like NVIDIA, Intel, and Micron Technology. Furthermore, ongoing supply constraints for rare…

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