Chip Stocks Drag Nasdaq Down 2% as Lam Research Flags Supply Limits

U.S. stocks fell to session lows on Thursday, October 22, 2026, as a sell-off in semiconductor shares pulled the Nasdaq Composite down 2.1%, Yahoo Finance reported. The S&P 500 fell 1.2% and the Dow Jones Industrial Average slipped 0.2% as of late morning in New York, while U.S. Treasury yields declined and oil prices climbed to a five-month high.

Lam Research guidance hits chip equipment makers

Chip stocks came under pressure before the opening bell after Lam Research, a maker of wafer-fabrication equipment, said supply limitations had held back its outlook. Chief Financial Officer Doug Bettinger said on the company's earnings call that quarterly revenue guidance of $8.6 billion "would have been a bit higher if not for some near-term supply chain constraints," which the company said it is actively managing, according to Yahoo Finance.

Lam shares fell as much as 10%. In premarket trading, Applied Materials was down 6% and ASML was down 3%, while the PHLX Semiconductor Index was down 4%, Yahoo Finance reported. Nvidia and Qualcomm each dropped more than 2%, Marvell Technology lost 4% and Intel fell 5%. Broadcom declined more than 3%, leaving the stock roughly flat for the year after reaching an all-time high earlier in 2026. Memory and storage companies Micron Technology and Sandisk also traded lower.

Comments on AI funding and memory demand

Nvidia Chief Executive Jensen Huang told CNBC that there is a "scarcity of capital" for so-called neocloud providers such as CoreWeave even though demand for computing power is "off the charts," comments that CNBC said were likely among the factors behind the day's selling in artificial intelligence-related stocks. GE Vernova, whose gas turbines are used to power data centers, was down almost 10%, according to CNBC, a day after it rose alongside other data center names.

In a separate CNBC interview on the sidelines of Nvidia's GTC Berlin conference, Huang said he does not expect an oversupply of memory chips by 2029. "One of the things that's really great about memory is that you can always use more of it," he said. Memory stocks have fallen over the past week after an October 15 opinion column in a South Korean publication warned of a possible glut in 2029, and after China's ChangXin Memory Technologies announced a new design architecture, CNBC reported.

Defensive sectors lead

Health care and consumer staples were the best-performing sectors in the S&P 500, according to CNBC, as investors moved toward more defensive parts of the market. Johnson & Johnson gained more than 2%, and Procter & Gamble reported quarterly results on Thursday. Blackstone shares climbed 5% after the investment firm gave an upbeat outlook for upcoming investment sales, Yahoo Finance reported.

Meta Platforms was down nearly 6% in the session following its quarterly report on Wednesday evening, CNBC said.

Oil, bonds and jobless claims

Brent crude rose to $112 a barrel and West Texas Intermediate climbed to $100 after a report that the United States and Israel were preparing for renewed attacks on Iran after the U.S. midterm elections, and after a deadly attack at a Saudi Arabian airport and oil field, Yahoo Finance reported. Treasury yields fell as investors bought government bonds.

On the economic front, initial filings for unemployment insurance fell to a seasonally adjusted 194,000 for the week ending October 17, the Labor Department reported, CNBC said. That was below expectations and close to the 189,000 recorded for the week of July 18, which was the lowest since September 1969. The four-week moving average declined to 197,750. Nonfarm payrolls rose by 29,000 in September, and the unemployment rate rose to 4.2%, according to CNBC.

Federal Reserve meeting next week

Federal Reserve policymakers meet next week to set interest rates. Markets expect the central bank to hold rates in October and to raise them by a quarter percentage point in December, CNBC reported. The September jobs report is scheduled for release on November 5.