Key Highlights

● Semtech tumbled on October 22 as semiconductor stocks sold off sharply.

● Semtech had no company-specific news.

● Lam guided December-quarter revenue to $8.6 billion, plus or minus $400 million.

● Volume on US exchanges reached 18.79 billion shares against a 17.19 billion average.

Shares of Semtech (NASDAQ:SMTC) tumbled on Thursday, October 22, 2026, as a sharp selloff in semiconductor stocks pulled the Nasdaq Composite to its steepest drop since June 5.

Semtech had no company-specific news. The decline was part of a sector-wide move that also hit AMD (NASDAQ:AMD), Monolithic Power Systems (NASDAQ:MPWR), MACOM (NASDAQ:MTSI) and Vishay Intertechnology (NYSE:VSH).

Lam's warning sets the tone

The trigger was Lam Research (NASDAQ:LRCX)'s quarterly report after Wednesday's close. The chip-equipment maker posted record revenue of $8.22 billion and adjusted earnings per share of $2.20, ahead of forecasts. But its December-quarter guidance, revenue of $8.6 billion plus or minus $400 million, had a midpoint slightly below consensus, and Lam said supply constraints were holding it back.

Lam's chief financial officer said revenue would have been higher without "near-term supply chain constraints that we are actively managing." He added that "things are going to continue to be constrained." Lam's chief executive said clean-room and component constraints would "limit chip makers and equipment companies' ability to fully meet end demand" into 2027.

Lam's own shares tumbled, and the selling spread quickly. The Philadelphia Semiconductor Index posted its biggest one-day drop since June 23. Applied Materials (NASDAQ:AMAT), KLA (NASDAQ:KLAC), Intel (NASDAQ:INTC), Marvell (NASDAQ:MRVL) and Micron (NASDAQ:MU) all fell, and Intel, AMD, Sandisk (NASDAQ:SNDK) and Marvell each fell sharply. Nvidia (NASDAQ:NVDA) closed at $212.21 and was one of the biggest drags on the S&P 500, according to market reports.

Where Semtech fits

Semtech is a semiconductor company, which put it in the group of chip stocks investors were reassessing on Thursday. Its decline came as volume on US exchanges ran well above average, at 18.79 billion shares against a 17.19 billion average over the prior 20 sessions, according to market data.

That reassessment went beyond chip supply. Meta Platforms (NASDAQ:META) said after Wednesday's close that it expects 2026 capital expenditure of $135 billion to $145 billion and reported negative free cash flow for the quarter. Investors questioned how long such spending can continue and how it will be funded.

Mid-sized and smaller chip companies tend to swing more than industry leaders when sentiment changes. FormFactor (NASDAQ:FORM) and MACOM were among the other notable decliners.

The bigger picture

The Nasdaq Composite closed at 26,008.86, down 694.00 points. The decline ended a seven-session winning streak and erased about $1 trillion in market value, according to market data. Decliners outnumbered advancers on the Nasdaq 2,766 to 2,022.

The S&P 500 fell 93.74 points to 7,663.43, its worst day since July, according to market reports. Yet about two of every three S&P 500 stocks rose. Investors rotated into consumer staples, which had their best day since April 2025, and into health care, utilities and homebuilders.

Treasuries rallied, with the 10-year yield closing back below a closely watched threshold for the first time since September 22. Oil climbed, with Brent crude settling at $113.17, its highest since May 4.

Semtech Looks to Chip Earnings and Cloud Spending

Investors will watch whether the chip selloff extends or eases. The Philadelphia Semiconductor Index closed just above its 200-day moving average, a level many traders follow. Earnings from Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) on October 28 and Amazon (NASDAQ:AMZN) on October 29 will provide fresh clues on data-center spending, which matters for chip stocks such as Semtech. The Federal Reserve announces its decision on Wednesday, October 28.