Chip Stocks Peak Every Two Years, and 2026 Fits the Pattern

Nvidia has fallen 28.86% over the past month, and one trader's chart says the drop fits a pattern that has repeated like clockwork since 2020. Thierry Borgeat posted a weekly chart of the Philadelphia Semiconductor Index on X on November 13, 2026, with past cycle tops circled. "Zoom out, and the panic starts to look familiar," he opened. Then: "Look for the little ovals. 2020. 2022. 2024. 2026. Roughly every two years, semiconductors climb into a cycle top, the party gets too loud, and the index falls."

The SOX tracks the largest U.S.-listed chip designers, manufacturers and equipment makers. The mechanics behind the two-year rhythm are old and well understood. Shortages push customers to double-order. Chipmakers raise capital spending. Inventory piles up, buyers pause, and the index follows. Stock prices usually peak before earnings do, which is why tops arrive while results still look great.

How hard have chip leaders already fallen?

The tape matches the first half of Borgeat's script. Over the past month:

• Nvidia (NASDAQ:NVDA): down 28.86%
• Applied Materials (NASDAQ:AMAT): down 21%
• Micron Technology (NASDAQ:MU): down 19.53%
• AMD (NASDAQ:AMD): down 12.32%
• Taiwan Semiconductor (NYSE:TSM): down 10.74%
• Broadcom (NASDAQ:AVGO): down 3.04%, the group's best hold

That slip marked the second-worst day on record for chip stocks. A sharp bounce followed — AMD gained 31.29% in a week — before Friday's session gave some of it back, with AMD off 9.29% and Micron down 3.95% intraday.

What signals back the two-year pattern?

Cycle tops usually show up first in memory, and Micron's numbers are extreme. Non-GAAP gross margin hit 87.0% in fiscal Q4 2026 versus 45.7% a year earlier, on revenue up 379.3% year over year, according to its earnings release filed with the SEC. Yet the stock trades at just 11 times trailing earnings and 4 times forward. Memory stocks carry multiples that low only when the market doubts peak profits will last. Micron CFO Mark Murphy acknowledged on the call that "eventually price increases would moderate."

Other late-cycle tells are stacking up. AMD's inventory rose to $11.46 billion, up 35% sequentially. DRAM's share of Applied Materials' Semiconductor Systems revenue climbed to 33% from 28%, a sign that memory makers are spending heavily on capacity. Broadcom, for its part, flags "cyclicality in the semiconductor industry undergoing profound change due to AI" as a risk factor.

Why could this cycle run longer?

The case against a clean repeat rests on contracts and supply limits. Micron said more than 75% of fiscal 2027 shipments are already committed, and that it has "no line of sight to when supply and demand balance." Broadcom forecast fiscal Q4 AI semiconductor revenue of $21.7 billion, up 236% year over year. AMD CEO Lisa Su put it plainly: "Demand is higher than supply." TSMC's October revenue rose 59.7% year over year, and Nvidia guided fiscal Q3 2027 revenue to $108.0 billion, plus or minus 2%.

What should long-term chip holders track now?

Borgeat's chart fairly describes how chip stocks trade: they top on expectations while earnings are still rising, and that is the setup today. What sets this cycle apart is order books contracted years out, which raises the bar for the fundamental downturn that normally follows a price top. The cycle turns only when the hard data turns, and it shows up in four places:

• Memory pricing: Micron said HBM pricing increased significantly for calendar 2027. Price cuts would be the clearest sign of a top.
• Inventory conversion: AMD needs that $11.46 billion inventory to turn into revenue near its Q4 guide of about $17 billion, plus or minus 3%.
• Equipment demand: Applied Materials forecast fiscal Q1 2027 revenue of $11.10 billion, plus or minus $500 million. A cut would point to capex digestion.
• TSMC monthly sales: The quickest public read on AI chip demand. A string of sequential declines would back Borgeat's ovals.

If all four hold up, the latest drop looks like another valuation correction within an expansion that keeps going. If two or more crack, the two-year cycle is playing out again, and the harder question becomes when to step aside. Either way, expect the volatility to continue.