What Happened?
A number of stocks fell in the afternoon session after chip stocks sold off in a session that laid bare the structural tension building beneath the sector's recent rally. Bank of America's fund manager survey, released in the morning, showed that 80% of respondents viewed semiconductors as the most crowded trade, the highest reading in the survey's history.
When that many professional investors are simultaneously aware they are overweight the same position, the incentive to move first is powerful. The exit had additional urgency from two macro reads. May import prices came in at 1.9%, nearly double the 1.1% consensus, with an annual gain of 6.7%, the largest since August 2022.
The data complicated the narrative that the Iran peace deal had resolved the inflation problem. The market was also anticipating Kevin Warsh's first meeting as Federal Reserve Chair, with some fund managers expecting a hawkish hold.
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:
- Semiconductor Manufacturing company Entegris (NASDAQ: ENTG) fell 5.6%. Is now the time to buy Entegris? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Penguin Solutions (NASDAQ: PENG) fell 5.6%. Is now the time to buy Penguin Solutions? Access our full analysis report here, it’s free.
- Analog Semiconductors company Skyworks Solutions (NASDAQ: SWKS) fell 5.6%. Is now the time to buy Skyworks Solutions? Access our full analysis report here, it’s free.
Zooming In On Skyworks Solutions (SWKS)
Skyworks Solutions’s shares are quite volatile and have had 19 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 6 days ago when the stock dropped 3.7% as the CPI print of 4.2% annual inflation (the hottest since 2023) revived the rate hike narrative.
Markets began to fully price a December Fed rate hike, and semiconductor stocks, which price on earnings years out, reprice faster than most sectors when discount rates move. The SpaceX IPO added secondary pressure: the company closed investor orders ahead of its debut at a $1.77 trillion valuation, and MSC identified chip names among the holdings facing the largest forced outflows as investors reallocate to fund the listing. Trump's mid-session Iran escalation, pledging to "attack very hard", drove the Dow to session lows, sealing the risk-off tone.
Skyworks Solutions is up 11.3% since the beginning of the year, but at $71.64 per share, it is still trading 14.1% below its 52-week high of $83.42 from May 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Skyworks Solutions’s shares 5 years ago would now be looking at only $419.14.
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