What Happened?

A number of stocks jumped in the afternoon session after investors extended a multi-day rally driven by rising compute demand for agentic artificial intelligence following the rollout of Meta Platforms' Muse agent. 

The catalyst centers on the compute requirements of autonomous software. Meta wrote on its research blog that each Muse agent operates inside a dedicated cloud virtual machine with persistent central processing unit and memory resources to manage operating systems, compile code, and coordinate subagents. This expands infrastructure demand beyond graphics accelerators to general-purpose server processors. Intel Chief Executive Lip-Bu Tan said the company can currently meet only about 50% of customer demand, according to Barron's. In a note to clients, Bank of America raised its AMD price target to $720 from $620, projecting agentic workloads will broaden compute needs across server processors. Meta, however, has not named specific chipmakers as contracted infrastructure suppliers. 

Separately, President Donald Trump announced a productive summit with Chinese President Xi Jinping, with high-level talks spotlighting artificial intelligence, according to Bloomberg. Broader equity markets held steady following the announcement, reflecting investor reassurance over diplomatic engagement between the world's two largest economies, Bloomberg reported. Artificial intelligence has become a focal point of global economic competition, making bilateral discussions between Washington and Beijing especially consequential for the technology sector. 

Constructive engagement between the two nations helps ease investor concerns regarding potential trade friction, supply chain disruptions, or abrupt regulatory restrictions affecting semiconductor and software industries. A stabilized geopolitical backdrop offers greater predictability for multinational technology enterprises investing heavily in artificial intelligence infrastructure and cross-border commercial opportunities.

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:

• Processors and Graphics Chips company Penguin Solutions (NASDAQ: PENG) jumped 5.3%. Is now the time to buy Penguin Solutions? Access our full analysis report here, it’s free.
• Analog Semiconductors company onsemi (NASDAQ: ON) jumped 5.9%. Is now the time to buy onsemi? Access our full analysis report here, it’s free.

Zooming In On onsemi (ON)

onsemi’s shares are extremely volatile and have had 38 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 1 day ago when the stock dropped 2.9% on the news that the 10-year Treasury yield climbed to 5.14% following strong September business activity data that raised expectations for tighter Federal Reserve interest rate policy. Technology and semiconductor shares came under selling pressure in premarket trading on September 24, according to TipRanks. The 10-year Treasury yield is the return investors earn for lending money to the U.S. government for a decade. When it rises, safer bonds become more attractive compared with stocks. 

That shift matters most for technology companies. Their valuations often rest on profits expected years in the future. Higher yields reduce what those future earnings are worth in today's dollars. The jump in yields followed strong September business activity data. Solid economic readings can lead investors to expect the Federal Reserve to keep interest rates higher, or raise them further, to prevent the economy from overheating. Tighter policy increases borrowing costs and can weigh on growth-focused sectors. 

Other pressures added to the selling. Elevated crude oil prices raised concerns about inflation. There is also uncertainty over trade and tariffs on advanced semiconductors ahead of the summit between President Trump and Chinese President Xi Jinping. Tariffs are taxes on imported goods, and any new restrictions could affect chipmakers that depend on global supply chains and sales to China. 

Together, rising rates, energy costs, and trade uncertainty created a difficult setting for the sector.

onsemi is up 36.1% since the beginning of the year, but at $77.17 per share, it is still trading 42.4% below its 52-week high of $133.93 from June 2026. Investors who bought $1,000 worth of onsemi’s shares 5 years ago would now be looking at an investment worth $1,560.

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