What Happened?

A number of stocks fell in the afternoon session after industry bellwether Texas Instruments signaled softer demand and issued a cautious outlook. Texas Instruments, a key chipmaker for various industries, sparked concern after it provided a weaker-than-expected forecast for the remainder of the year. Analysts on the company's earnings call noted a "tone shift" from executives regarding the semiconductor recovery cycle compared to previous quarters. The change in messaging from a major industry player created uncertainty about the health of the overall chip market. This cautious sentiment appeared to weigh on related stocks, as investors reassessed the sector's near-term growth prospects.

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 Microchip Technology (NASDAQ: MCHP) fell 5.9%. Is now the time to buy Microchip Technology? Access our full analysis report here, it’s free.
• Analog Semiconductors company onsemi (NASDAQ: ON) fell 5%. Is now the time to buy onsemi? Access our full analysis report here, it’s free.
• Processors and Graphics Chips company Allegro MicroSystems (NASDAQ: ALGM) fell 6.4%. Is now the time to buy Allegro MicroSystems? Access our full analysis report here, it’s free.

Zooming In On Allegro MicroSystems (ALGM)

Allegro MicroSystems’s shares are extremely volatile and have had 39 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 7 days ago when the stock dropped 3.3% as a cautious outlook from semiconductor equipment giant ASML sparked a broad sell-off across the sector, hitting chipmakers and equipment suppliers alike. The negative sentiment was triggered after the Dutch firm, whose complex machines are essential for producing advanced chips, warned it could no longer guarantee growth in 2026. ASML's management cited "increasing uncertainty driven by macro-economic and geopolitical developments," including the potential for new U.S. tariffs. As an industry bellwether, a company whose performance is seen as an indicator of the entire sector's health, ASML's comments are a key signal of future capital spending. The warning sent a chill through the market, as concerns grow that trade tensions could disrupt the highly globalized semiconductor supply chain and slow down investment from chip manufacturers.

Allegro MicroSystems is up 48.5% since the beginning of the year, but at $33.88 per share, it is still trading 9.7% below its 52-week high of $37.51 from July 2025. Investors who bought $1,000 worth of Allegro MicroSystems’s shares at the IPO in October 2020 would now be looking at an investment worth $1,914.

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