What Happened?

A number of stocks fell in the morning session after the U.S. government announced new tariffs of 10% to 12.5% on 60 trading partners over concerns related to forced labor. The targeted nations include the European Union, Japan, South Korea, and Taiwan—the fundamental pillars of the global semiconductor supply chain. While the U.S. designs many of the world's leading chips, the industry relies heavily on imported specialty chemicals, raw silicon wafers, and multi-million-dollar fabrication equipment from these exact regions. Furthermore, many U.S. chipmakers use Outsourced Semiconductor Assembly and Test (OSAT) facilities overseas, meaning finished chips imported back into the U.S. could now face double-digit taxes. Because these new Section 301 tariffs are considered legally durable and potentially permanent, investors are pricing in long-term margin compression across the U.S. hardware and semiconductor space. This triggered a broad sell-off across the entire sector, amplifying a global rout that began overnight with Asian chip heavyweights Samsung and SK Hynix.

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 Himax (NASDAQ: HIMX) fell 3.5%. Is now the time to buy Himax? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company Teradyne (NASDAQ: TER) fell 4.4%. Is now the time to buy Teradyne? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company Entegris (NASDAQ: ENTG) fell 3.4%. Is now the time to buy Entegris? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company IPG Photonics (NASDAQ: IPGP) fell 3%. Is now the time to buy IPG Photonics? Access our full analysis report here, it’s free.
• Processors and Graphics Chips company Penguin Solutions (NASDAQ: PENG) fell 5.7%. Is now the time to buy Penguin Solutions? Access our full analysis report here, it’s free.

Zooming In On Penguin Solutions (PENG)

Penguin Solutions’s shares are extremely volatile and have had 49 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 16 days ago when the stock gained 19.8% on the news that the company reported second-quarter results that significantly surpassed Wall Street's expectations and raised its full-year profit forecast. The quarter was a genuine beat: record revenue of $478.7 million rose 48% year over year and topped consensus of about $414 million, while non-GAAP EPS of $0.84 came in well above the roughly $0.55 expected and jumped 79% from a year earlier. But the reaction was really about the guidance. Penguin roughly doubled its full-year revenue-growth guidance (from 12% to 22%) and lifted its full-year non-GAAP EPS target to $2.60 from $2.15, attributing the upgrade to "very strong agentic AI-driven customer demand." The driver was the Integrated Memory segment, where sales more than doubled to $275.1 million, as CEO Kash Shaikh framed memory as "one of the primary performance and scalability bottlenecks" for agentic AI workloads. However, the company also reported negative free cash flow and a rise in inventory, metrics investors will be watching closely in the coming quarters.

Penguin Solutions is up 170% since the beginning of the year, but at $54.80 per share, it is still trading 32.7% below its 52-week high of $81.39 from July 2026. Investors who bought $1,000 worth of Penguin Solutions’s shares 5 years ago would now be looking at an investment worth $2,369.

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