The Midterms Are Over. Here's What Chip Stocks Did in the Year After Each of the Last 8. | The Motley Fool
Tuesday’s midterm vote is behind us, and chip stocks came into it bruised. The VanEck Semiconductor ETF (SMH -2.75%) ended Election Day at $518.52. That was around 22% under the fund’s highest close ever, set on June 22, but it still left the fund up about 44% in 2026.
What have chip stocks usually done over the 12 months after a midterm vote?
I went back to the PHLX Semiconductor Index, a widely watched chip benchmark with daily data going back far enough to cover the past eight midterms. For each one, I compared the index’s close on Election Day to its close on the same date a year later, on price alone.
The record’s impressive. But I think where chip stocks start this time is a reason to lower expectations.
Image source: Getty Images.
A strong record
The index closed up a year later after every midterm since 1994 except one. Averaged over all eight cycles, the index climbed around 42% in the 12 months after the vote, and the middle result was a gain of about 38%.
The table below lists each cycle, plus how the index did in the 12 months before each vote.
| Midterm year | 12 months before the vote | 6 months after | 1 year after |
|---|---|---|---|
| 1994 | Not available | Up 44% | Up 66% |
| 1998 | Down 20% | Up 48% | Up 133% |
| 2002 | Down 37% | Up 9% | Up 64% |
| 2006 | Up 3% | Up 8% | Down 5% |
| 2010 | Up 26% | Up 19% | Up less than 1% |
| 2014 | Up 27% | Up 9% | Up 5% |
| 2018 | Down 6% | Up 24% | Up 38% |
| 2022 | Down 34% | Up 21% | Up 39% |
| 2026 | Up 46% | Not yet known | Not yet known |
Data source: Yahoo Finance. Calculations by author.
The only loss was after the 2006 vote, when the index fell around 5% in the next year. And 2010 hardly counts as a win, because the index finished that year less than 1% above its Election Day close.
Six months out, there’s no loss at all. The index was up half a year after all eight midterms, with gains from around 8% after 2006 to about 48% after 1998.
The index also beat the S&P 500 in six of the eight post-midterm years, though barely in 2014. The S&P 500 itself climbed in all eight years but by around 13% on average.
Losing years came before most of the biggest gains
In four of these cycles (1998, 2002, 2018, and 2022), chip stocks headed into Election Day down over the prior 12 months, and the fall topped a third in two of them. Those four cycles all landed among the five biggest gains on the list, ranging from around 38% to about 133%, with an average of about 68%.
The years that began with gains did far worse. The index headed into the 2006, 2010, and 2014 votes up over the prior 12 months, by as much as around 27% in 2014. These three cycles produced the three weakest results in the table.
This pattern makes some sense. Chip stocks tend to trade like a growth stock, rising and falling with what investors expect years out.
A chip index that’s already sold off for a year might have much of a downturn priced in. One coming off a strong run, though, may carry a valuation that already reflects lots of good news.
The exception is 1994. My daily data on the index begins in May that year, too late to cover a full year before the vote. But it had already risen around 19% from early May to Election Day, and it still gained about 66% the next year.
Where does 2026 fit?
This year’s rally into the vote is bigger than any in the record. The PHLX Semiconductor Index finished Election Day around 46% above its level a year earlier, far past the 27% rise it carried into the 2014 vote.
SMH VanEck ETF Trust – VanEck Semiconductor ETF
$504.27-$14.25 (-2.75%)
NASDAQ · As of 4:00 PM ET 11/04/26
True, the index has already given back plenty. Its Election Day close of around 10,600 was about 28% below the record 14,635 it set on June 22, a bigger slide from a 12-month high than in 2006, 2010, or 2014.
But a fall from a summer peak isn’t the same as a losing year. This year, an investor who bought the index a year before the vote still has a gain of almost half.
Of course, eight cycles is a thin record, and splitting them four and four makes it thinner. The year after a vote also depends more on chip demand, including spending on artificial intelligence, than on the election itself.
But going by this record, I wouldn’t sell chip stocks now that the vote is behind us. What I wouldn’t count on is a repeat of the 40%-plus average, at least not without another big rise in chipmakers’ revenue. With the index still up around 46% in the last year, I think the next 12 months might look like the quieter years after the 2010 and 2014 votes. Both still finished with small gains.
