AI Capex Doubts Put Semiconductor Stocks at Center of Market Stress

The S&P 500 set a fresh all-time high in August 2026, yet by October investors had turned their attention to a single question: how durable is the artificial intelligence capital spending cycle. That shift in focus, described by Chris Puplava, Chief Investment Officer at Financial Sense Wealth Management, now sits at the center of market stress for technology and semiconductor shares.

How did the weakness develop?

On the surface, the economy and financial markets appeared solid after the August peak. Beneath that surface, warning signs were building. Oil prices were among the early stress points flagged in Puplava's analysis, published November 9, 2026.

The market's focus then moved decisively in October. Investors began questioning two linked variables: the durability of AI capital expenditures and the pace of data center construction. Semiconductor suppliers, which sit upstream of that construction cycle, are directly exposed to any slowdown in either.

Puplava framed the central issue plainly: whether AI-related capital expenditures, and particularly data center construction, will slow materially. A material slowdown would compress revenue expectations across the chip supply chain, from accelerators and memory to networking silicon and power management components.

What is the risk of a broader unwind?

One specific risk under consideration at Financial Sense is whether the current reassessment of AI spending could develop into a broader unwinding of technology valuations. That distinction matters for semiconductor investors. A contained reassessment reprices individual AI-exposed names. A broader unwind reprices the sector as a whole, including suppliers with only indirect data center exposure.

The analysis identifies three conditions that could reinforce weakness in AI and semiconductor stocks if they persist:

• A material slowing of AI capital expenditures
• Policy uncertainty following the midterm elections
• Tighter credit conditions

Puplava noted that if these trends continue together, they would also raise recession risks. For chipmakers, that combination would hit from two directions at once: weaker end demand from data center customers and higher financing costs for capacity expansion.

Why has the broader market held up?

Sector rotation explains much of the resilience. Investors have moved money from technology into defensive and value stocks. That rotation has helped the broader S&P 500 stay relatively firm even as most of its constituents declined sharply from their highs.

The divergence is the key structural fact. Index-level stability has coexisted with significant drawdowns beneath the surface. Investors tracking semiconductor equities through index performance alone would understate the stress already present in AI-adjacent names.

What could support equities from here?

Puplava's analysis points to three potential sources of demand and support for equities if selling pressure eases:

• Extremely negative CTA positioning, which implies substantial room for trend-following funds to buy back into the market
• Record corporate buyback authorizations, totaling $166 billion in October
• Positive post-midterm seasonality

The buyback figure is the most concrete. At $166 billion in a single month, October 2026 set a record for corporate repurchase authorizations, according to the analysis. That committed capital represents a mechanical bid for shares that does not depend on sentiment recovering on its own.

Where does the market go from here?

Puplava's answer is conditional. As long as investors continue rotating among sectors rather than exiting equities altogether, the broader market may remain relatively resilient. The open question for semiconductor investors is whether AI capital spending holds. If data center construction slows materially while credit tightens and policy uncertainty lingers, the current reassessment could extend into a full valuation unwind for AI and chip stocks. If instead buyback demand and negative CTA positioning absorb the selling, rotation alone may keep the index stable while the AI trade reprices beneath the surface.