[Nov 2, Monday Japanese Stock Strategy] SOXL plunged about 25% in one day. Is the AI market over, or is the market just starting to see the bill?
Intel’s outlook, concerns over AI investment returns, and Japanese semiconductor stocks. Three scenarios to avoid jumping in at the opening bell
Paid article | Updated as of: Sunday, November 1, 2026
On Friday, semiconductor stocks were sold off heavily. SOXL fell approximately 24.8% from the previous day in the U.S. market on October 30, closing at $77.05. The ETF, which aims for 3x the daily movement of the overall semiconductor stock decline, took an amplified hit. SOXS rose about 24.9% on the same day. Looking at the numbers alone, it might seem like the market has issued a ‘notice that AI is over’.
However, the market says it’s ‘over’ almost every week, only to revive the following week. It is better to check the date of the market’s memorial service before attending.
What was sold this time? How is it likely to spill over into Japanese stocks on Monday? Should you dump SOXL, jump on SOXS (bear), or do nothing? In this article, I will organize the information available at this moment and divide Monday’s actions into three scenarios.
Key points first: Neither buying the dip on SOXL at Monday’s opening nor jumping all-in on SOXS is well-founded based solely on the fact that ‘it went down.’ Japanese stocks have a holiday on Tuesday, spanning U.S. events. The first job is not to guess correctly, but to build a structure that won’t break your account if you are wrong.
*This article is a general market commentary based on public information as of November 1, 2026. It does not recommend buying or selling specific stocks or financial products. Prices and schedules may change, and you may lose your investment principal. Please make trading decisions at your own discretion and risk.
First, what happened?
In the U.S. market on October 30, the Nasdaq Composite Index fell 2.86% and the S&P 500 fell 1.82%. The semiconductor stock index also fell significantly, with Reuters reporting a 7.2% decline for the semiconductor index. Intel fell 28.6%, AMD fell 10.9%, and Nvidia fell 4.2%. It was a day when the entire semiconductor sector was caught up in risk aversion. [Reuters][AP]
SOXL closed at $77.05 on this day, down 24.75% from the previous day. Meanwhile, SOXS, which aims to profit from the decline in semiconductor stocks, rose about 24.9%. [Price Data]
The trigger is Intel’s ‘future’ rather than its ‘past’
Intel’s actual performance for the most recent quarter exceeded market expectations in some areas. However, what investors took seriously was that the sales and profit outlook for the next quarter fell short of expectations, as well as concerns about the future due to a weak PC market and memory shortages. Stock prices can be moved not just by the past record in a report card, but by the note the teacher writes in red ink: ‘Don’t let your guard down next semester’.
Furthermore, the market has started to see the ‘bill’ for AI investment
As Amazon increases its AI infrastructure investment, its free cash flow for the last 12 months has decreased significantly. With Alphabet also expanding AI-related investments, capital expenditure and cash usage have become the focus of the market. Investors are beginning to ask not only ‘Is AI amazing?’ but also ‘When and how much will that investment turn into profit?’
In other words, the AI market has shifted from ‘show me the demo’ to ‘show me the bill and the recovery plan.’ It cannot be said that expectations for AI have disappeared, but it is becoming difficult to support high stock prices based on expectations alone.
Therefore, this decline is not synonymous with ‘AI demand has disappeared’
Corporate capital investment and AI demand did not vanish overnight. This sharp decline is likely a combination of Intel’s specific outlook deterioration, doubts about the profitability of AI infrastructure investment, and profit-taking on stocks that had high expectations built up.
In other words, the question to determine is not ‘Is AI over?’, but has the market started to distinguish between companies that benefit from AI investment and companies that bear the cost of that investment first?.
Do not view the sharp decline in SOXL with the same mindset as a regular ETF
SOXL and SOXS are products that aim for +3x and -3x the ‘daily’ movement of the semiconductor index, respectively. The management company, Direxion, clearly states that for periods longer than one day, the return is not necessarily 3x (or -3x) the cumulative return of the index, and that it is affected by compounding effects and volatility. [Direxion]
Therefore, on a day when SOXL drops nearly 25%, simply calculating that “semiconductors are down 8%, so it’s roughly 3 times that” is merely a guideline. Holdings, index composition, intraday price movements, and rebalancing all affect the results.
More importantly, the rebound rate after a sharp drop does not have to be the same as the decline rate. If 100 drops to 75, it requires an increase of approximately 33.3% to return to the original 100. The decline rate and the recovery rate are not symmetrical. In daily leverage products like SOXL, the effects of daily compounding and the magnitude of price movements are added to this.
“Buying because it got cheaper” is difficult enough with ordinary physical stocks. If you do the same thing with leveraged products, you are adding a time limit and a loud alarm to a difficult problem.
From here, I will summarize the group of stocks to watch in the Japanese market on Monday, the items to check after the opening, and three action scenarios: bullish, bearish, and wait-and-see.
Rather than guessing “which stocks will rise,” this content is about deciding in advance what kind of price movement would keep a stock as a buy candidate, and what kind would lead to passing on it. This is for those who want to avoid being rushed by the market at the opening and making up reasons later.
Impact on Japanese stocks: Semiconductors likely to be tested first on Monday
On October 30, the Japanese market ended with the Nikkei 225 down 2.1% at 63,290.11 yen, following caution after Intel’s earnings. Semiconductor-related stocks like Advantest pushed the index down. However, this was the Tokyo market’s movement before the US market fell further on Friday. Therefore, on Monday, the Tokyo market may re-price the decline from the US market on Friday. [Reuters]
The impact is likely to be felt by stocks where expectations for AI and data center investment have been strongly reflected in the stock price, such as semiconductor manufacturing equipment, inspection equipment, and materials. On the other hand, even within the same “semiconductor-related” sector, customers, products, and earnings outlooks differ. It is not guaranteed that everything will fall by the same margin as the index, nor that everything will recover at the same time.
Monday’s watch list (a list to observe price movements, not a buy recommendation)
| Stock | Reason for watching | What to check on Monday |
|—|—|—|
| Advantest (6857) | Semiconductor inspection equipment. Expectations for high-performance semiconductors for AI are easily reflected in the stock price, and it has a large impact on the index | Will selling continue after the opening, or will it stop falling faster than the Nikkei 225? If it remains below the previous day’s low, do not rush to aim for a rebound |
| Tokyo Electron (8035) | A representative semiconductor manufacturing equipment stock. It reacts significantly to capital expenditure outlooks | To what extent will it price in the decline of US semiconductor stocks? If the rebound after the opening is weak and it hits a new low with trading volume, be cautious |
| Disco (6146) | Handles equipment for semiconductor manufacturing processes, and price movements tend to be large | Assuming a large price range, can you keep the number of shares down? Do not decide it is “undervalued” just by looking at the amount it fell |
| Lasertec (6920) | Among semiconductor-related stocks, its price tends to fluctuate easily due to expectations and supply and demand | Even if it rebounds, do not chase it just because of a sharp rise immediately after the opening. Check if it can maintain the high price |
| Fujikura (5803) | Has AI-related themes different from semiconductor manufacturing equipment, such as communication infrastructure for data centers | Is it relatively firm while semiconductor equipment stocks are weak? However, there is a possibility that it will fall in sympathy just because it is AI-related |
This table is not a “list of stocks that will make money if you buy them on Monday.” It is a watchlist that organizes stocks that are sensitive to news and the points to watch. If you place an order just by looking at the stock name, it’s like paying for a meal before you’ve even seen the menu.