What Happened?
A number of stocks fell in the afternoon session after semiconductor stocks pulled back following a rally the previous week as geopolitical tensions between the US and China increased over artificial intelligence technology.
The contest over AI entered a more confrontational phase after China ordered Meta to unwind its $2 billion acquisition of the AI startup Manus, citing national security concerns. This move was seen as a direct intervention to limit foreign access to its advanced technology sector.
Adding to the friction, the White House accused China of stealing American AI technology on an "industrial scale" and has warned of intensified crackdowns. This struggle over talent, intellectual property, and strategic technologies created significant uncertainty for companies operating in the global AI landscape, as national interests increasingly dictate corporate activity.
Contributing to the weakness was the continued concerns over global supply chain disruptions stemming from the conflict involving the US, Israel, and Iran. The crisis also led to higher raw material costs for a wide variety of industries. This geopolitical instability is raising concerns among investors about potential production delays and increased operational costs for technology hardware companies.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Analog Semiconductors company Skyworks Solutions (NASDAQ: SWKS) fell 3%. Is now the time to buy Skyworks Solutions? Access our full analysis report here, it’s free.
- Analog Semiconductors company Universal Display (NASDAQ: OLED) fell 4.4%. Is now the time to buy Universal Display? Access our full analysis report here, it’s free.
Zooming In On Universal Display (OLED)
Universal Display’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 28 days ago when the stock dropped 3.7% on the news that rising geopolitical tensions from the Iran war, threatened to disrupt critical supply chains.
The conflict raised alarms beyond oil prices, with a significant risk looming over the supply of essential gases, such as helium, which are vital for semiconductor manufacturing. Major chip fabricators, including Taiwan Semiconductor Manufacturing Company, Samsung Electronics, and SK hynix, were projected to face significant production challenges in the event of a supply constraint. Such disruptions would create cascading effects across the tech industry, impacting the production of everything from Apple's iPhones to Nvidia's advanced AI servers. The uncertainty has contributed to a broader market downturn, pushing the Nasdaq into a correction.
Universal Display is down 22.2% since the beginning of the year, and at $94.78 per share, it is trading 41.3% below its 52-week high of $161.44 from July 2025. Investors who bought $1,000 worth of Universal Display’s shares 5 years ago would now be looking at only $400.63.
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