Wild swings in global chip stocks are likely to continue until markets know where US interest rates are heading and who controls Congress after the midterms, warns the CEO of deVere Group, one of the world’s largest independent financial advisory organisations.
The comments from Nigel Green come as the turmoil spread from Wall Street to Asia on Thursday. South Korea’s Kospi closed down 7.57% after an 8% plunge triggered a 20-minute trading halt, and Japan’s Nikkei 225 sank almost 5%.
He says: “Markets are flying blind on the two things that matter most for tech valuations right now: where US rates go next, and what Congress looks like after November.
“Until both come into view, I expect these swings to keep coming, and to stay volatile.
“Chips are feeling it most because they rallied hardest and they’re the most exposed to borrowing costs. When sentiment shifts, they move furthest in both directions.”
Asia took the heaviest blow with the Kospi’s seventh straight loss, its longest losing run since September 2024, leaving the index more than 16% lower in a month. Just 52 of the 916 shares traded in South Korea rose on Thursday.
Wednesday’s US inflation figures lit the fuse, showing consumer prices rising at their fastest monthly pace in five months and lifting bets on further Fed hikes. AI funding fears deepened when the bonds of a heavily indebted AI cloud provider slid towards distressed levels.
“Higher rates hit chip stocks twice,” says Nigel Green. “They make future profits worth less today, and they make it more expensive to borrow the vast sums needed to build AI infrastructure.
“When a company at the heart of that build-out sees its bonds sold off this hard, everyone starts asking who else is stretched.”
Strong results from some of the sector’s biggest names have done little to steady the market. Fresh worries over Chinese competition in memory chips have added to the pressure on Asia’s tech-heavy markets.
“You can post a great quarter and still watch your shares lurch around when rates are moving against you,” says the deVere CEO.
“Demand for AI hardware is booked years ahead, and the leading chipmakers are in good shape. What’s changed is the price investors are prepared to pay, and right now the bond market is setting it.”
Fed policymakers meet on October 27 and 28, less than a week before the November 3 midterms, with their final meeting of 2026 on December 8 and 9.
Nigel Green believes the Fed is likely to hold this month and raise rates again in December.
“Until markets have more certainty on that path, and on the election, every data release is likely to move prices far more than it normally would,” he says. “I’d expect plenty more days like this, up and down, before the year is out.”
He concludes: “Turbulence like this is uncomfortable, but it does a job. It squeezes out the excess and pulls valuations back towards levels grounded in earnings and cash flow.
“Once the rate path is clearer and the election is behind us, I expect the focus to return to the enormous long-term demand for AI hardware.
“Between now and then, the ride is likely to stay rough.”
