The 200-day moving average is the line many traders use to separate a pullback from a broken trend. In just four sessions this week, 10 of the biggest names in the artificial intelligence trade have fallen through it.
Together, those 10 companies are worth about $8.8 trillion.
The list runs from NVIDIA Corp. (NVDA) and Micron Technology Inc. (MU) to Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), Advanced Micro Devices Inc. (AMD) and Cisco Systems Inc. (CSCO).
All 10 were trading above their 200-day average last Friday. By Thursday, all of them were trading below it.
The Election Turned Against the AI Buildout
Most of the damage came after Tuesday's midterm elections, in which Democrats won control of both chambers of Congress and key governorships.
Investors quickly priced in the risk that data center construction would slow, especially in Texas, where much of the next wave of AI capacity is planned. As a result, the broad market rallied on Wednesday while companies supplying the AI buildout sank.
Dennis DeBusschere of 22V Research said his team had flagged the threat to 2027 AI spending from Texas before the vote, but underestimated it.
"There is a clear pivot to a less AI-driven growth world," DeBusschere said in a note Thursday.
Marvell Broke First, Nvidia Followed
Marvell Technology Inc. (MRVL) was the first to crack. The stock fell 12.7% on Monday to $171.41, below its 200-day average of $184.80, as investors pushed back on its deal to buy optical-component maker Lumentum Holdings Inc. (LITE).
On Tuesday, TD Cowen and Bank of America downgraded the stock. Marvell now trades 25.4% below its trend line.
Nvidia closed at $200.13 on Wednesday, below its 200-day average of $204.67.
On Thursday, it fell another 8.4% to $183.27, putting it 10.5% below the line. The two-day drop has erased about $564 billion of market value. The company reports earnings on Nov. 17.
Taiwan Semiconductor broke the same day, closing at $395.75 against a 200-day average of $401.25. The world's largest contract chipmaker is now 11.5% below that level.
Micron, AMD, Qualcomm and Cisco Followed on Thursday
Micron had held its trend line on Wednesday despite a 7% drop. On Thursday, it slid another 15.9% to $669.03, falling 11.4% below its 200-day average of $755.33.
The sell-off came even as demand data stayed strong. According to Counterpoint Research, global DRAM revenue rose 369% year over year in the third quarter.
AMD suffered the same fate. The chipmaker closed Wednesday at $488.78, well above its trend line. On Thursday, it plunged 15.9% to $411, slipping 1% below its 200-day average of $415.03.
Qualcomm Inc. (QCOM) dropped 13.7% after its earnings report late Wednesday. Revenue of $10.4 billion landed at the high end of guidance, according to Counterpoint Research. However, the handset business stayed under pressure from tight memory supply.
Shivani Parashar, a senior analyst at Counterpoint Research, said in emailed comments that automotive revenue jumped 89% to a record $2 billion. She also said Qualcomm expects data center revenue above $650 million in the December quarter and reiterated its $5 billion target for fiscal 2027.
Dell Technologies Inc. (DELL), which builds AI servers, fell 13.9% to $320.72. Arista Networks Inc. (ANET), whose switches connect AI data centers, dropped 10.4%. Cisco and Cloudflare Inc. (NET) also crossed below their lines Thursday. Cloudflare reports earnings after the closing bell.
The Nasdaq 100 Lost Its Line Too
The damage has now reached the index level.
The Nasdaq 100 fell 5.4% Thursday to 26,909.96, 3.8% below its 200-day average of 27,977.94. The VanEck Semiconductor ETF (SMH) dropped 10.3% and now trades 13.3% below its own average.
By contrast, the S&P 500 remains 1.2% above its 200-day line, even after falling 3.6%.
Palantir Technologies Inc. (PLTR) is the next heavyweight on the edge, trading just 1.4% above its average.
Technicians See More Downside
John Roque, technical strategist at 22V Research, said he identified bubbles in AI, semiconductor and memory stocks in June.
On Wednesday, the Dow rose 3% while the Philadelphia Semiconductor Index fell 3%, according to Roque. He said the split recalled Two-Face, the Batman villain.
"AI + Semis + Memory stocks acted poorly and I believe will continue to do so," Roque said in a note Thursday.
According to Roque, an old rule from Bob Farrell, the former head of technical analysis at Merrill Lynch, applies here: markets that rise at a near-vertical pace rarely correct by moving sideways. He said he expects further weakness in SanDisk Corp. (SNDK), CoreWeave Inc. (CRWV) and the Korean and Taiwanese chip benchmarks.
However, a break below the 200-day average is a signal about trend, not a forecast. Many of these companies are still reporting record demand. The next test arrives Nov. 17, when Nvidia reports.
