The latest hedge fund blowup in the chip sector sent ripples through the markets last Thursday. We’ve seen approximately five hedge fund liquidations since COVID, and while it’s difficult to predict exactly when these situations will play out, this latest liquidation appears to be moving relatively quickly.

Comments following the midterm results regarding data centers contributed to selling pressure and liquidations across several chip-related companies, including NVDA, AVGO, MU, and AMD. If the chip sector is due for a correction, that’s okay. This shouldn’t come as a surprise, as we’ve been urging caution around the chip sector for the past 6–12 months.

Ultimately, these liquidations will run their course when they run their course. If this marks the end of the chip trade, perhaps it’s simply time for a shift in focus. The sector has been in the spotlight for quite some time, and there are plenty of other areas of the market that may deserve attention.

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