The U.S. stock market has officially entered a "correction zone" — what happened to those who bought at similar moments in history?

The S&P 500 has fallen more than 10% from its February high, officially entering a "correction zone" (correction zone = a drop of more than 10% from a recent high, a standard Wall Street term for measuring the depth of market adjustments). The CNN Fear & Greed Index fell to 15 – the "Extreme Fear" level. The VIX (Fear Index, a measure of market expectations for future volatility, higher means more fear) surged to 26.78. Short interest (the amount of shares sold short) in the semiconductor ETF SMH exploded from 6.5 million shares in November last year to 18 million shares – a threefold increase. All panic signals flashed red in the same week. Yet, in that same week, Micron just delivered the semiconductor industry's best earnings report in a decade. Putting these two things together, this has only happened three times in the past ten years.
First, understand a key question: What determines whether "it can rise back after falling"?
There's only one answer: whether the money companies are earning has decreased.
If the drop is solely due to a collapse in market sentiment (interest rate worries, geopolitical panic), but the company's orders, revenue, and profits are still growing – this is "valuation compression" (valuation compression = the stock price fell because the multiple the market is willing to pay decreased, not because the company earned less money). Historically, the probability of recovery is high. If it's because the company's business has genuinely deteriorated (reduced orders, declining profits) – that's "earnings downgrade," which recovers much slower, sometimes never coming back.
Three Historical Comparisons
August 2024 – "Recession Panic"
What happened: Japan suddenly raised interest rates, global funds frantically unwound positions (unwinding = closing all positions that borrowed yen to buy stocks). The VIX once surged to 65, and the S&P fell 6% in three days. The semiconductor ETF fell 17% in two weeks, and Nvidia dropped from $130 to $98.
Did corporate earnings deteriorate? No. Q3 earnings reports beat expectations across the board, and Nvidia's Blackwell was confirmed to be in short supply.
What happened later? Six months later, the S&P rose about 25%, and Nvidia rose 53%.
October 2022 – "Rate Hike Panic"
What happened: The Fed aggressively raised rates all the way to 4.25%. The S&P fell 25% from its year-start high, entering a bear market. Nvidia fell 68%.
Did corporate earnings deteriorate? The semiconductor industry was indeed destocking, but the new AI narrative kicked off (ChatGPT launched in November).
What happened later? Twelve months later, the S&P rose 22%, and Nvidia rose 310%.
December 2018 – "Tightening + Trade War"
What happened: The Fed insisted on raising rates to 2.50%, the US-China trade war escalated, and the S&P fell 20%.
Did corporate earnings deteriorate? No. The Fed turned dovish under market pressure.
What happened later? In 2019, the S&P rose 29%, and semiconductors rose 73%.
The pattern is clear: Every time the S&P enters a correction zone + the fear index hits extreme fear, but corporate earnings do not deteriorate simultaneously, the returns 6-12 months later are significantly positive. The key is judging "whether earnings have deteriorated this time."
Now: March 2026 – Have earnings deteriorated?
Data released just 48 hours ago: Micron revenue $23.86 billion (nearly tripled year-over-year), Q3 guidance $33.5 billion + gross margin 81% (gross margin = the percentage of profit from selling products, 81% means netting $81 from selling $100 worth of chips, extremely exaggerated), signed its first 5-year long-term agreement. Broadcom's AI chip guidance exceeded expectations by 15%. GTC confirmed $1 trillion in orders. Not a single number is getting worse.
So what is the market panicking about? Interest rates. The Fed kept rates unchanged at 3.50-3.75%. February PPI (Producer Price Index, a measure of inflation at the business end) was 0.7%, far exceeding the expected 0.3%. Rate cut expectations worsened from "one cut this year" to "no cut this year." Brent crude at $106 pushes up inflation expectations.
Interest rates are indeed a real problem – but they affect the "valuation multiple" (PE, price-to-earnings ratio, which is how much the market is willing to pay for one dollar of profit), not "how much money the company is making."
The PE for the entire AI semiconductor sector has already compressed from 30-40x a year ago to 9-23x (Micron 9x, Broadcom 16.6x, Nvidia 23x) – interest rate fear has already been largely priced in. If interest rates remain high going forward but AI orders don't decrease, valuations will recover from an overly compressed position. If AI orders start to decrease – then there is indeed a problem. But currently, no data points in that direction.
How to verify? – Watch these three time points
Mid-to-late April: Meta and Google release Q1 earnings (most critical)
You only need to look at one number: Is the 2026 AI investment budget (capex, the money for building data centers and buying chips) being raised, maintained, or lowered? Maintained = AI spending unchanged, the current drop is "valuation compression," and historical patterns say it will rise back. Lowered = AI spending starts to shrink, and all the historical comparisons above are invalid.
May 27: Nvidia Q1 earnings
Can the $1 trillion in orders mentioned at GTC show substantial progress in the quarterly guidance? $183 is the current price, $180 is the 200-day moving average (the average stock price over the past 200 days, an important technical support line).
June: Micron Q3 + Marvell Q1
Can Micron deliver on the 81% gross margin? Can Marvell hold its 59% gross margin?
If I were to rank them: Who is most worth watching?
Broadcom $316, PE 16.6x – Best profitability (EBITDA 68%), lowest valuation, most locked-in customers (six major customer contracts until FY2028). In an environment where interest rate fears compress valuations, companies with good profits and low valuations recover the fastest. Goldman Sachs target price $480 (+52% upside).
Micron ~$415, PE 9x – Strongest fundamentals (revenue tripled + 81% gross margin), but the greatest concern is "cycle peak." Whether $430 can hold is key in the short term ($430 was the pre-GTC rally platform).
Nvidia $183, PE 23x – Wait for 5/27. The 200-day moving average at $180 is the bottom line.
Marvell $88, PE 30x – Most expensive, most uncertain. Gross margin is declining, and competition in custom chips is intensifying.
What did we get right in the past three weeks?
3/12 said "Oil prices don't change the direction of AI investment" ✅ Micron's capex was instead raised by $5 billion. 3/16-17 said "Memory benefits more than GPUs" ✅ On GTC day, Micron +4.8% vs Nvidia +1.7%. 3/19 said "$430 is key support" ⚠️ Pre-market -6% is testing it. 3/20 said "Q2 is the best window" ⚠️ Panic continues to intensify, the judgment is under stress test – but the fundamental direction hasn't changed.
My time bet: The first verification point is Meta's Q1 earnings in April. If capex is maintained at $115-135 billion, looking back, this week will be the cheapest price for AI chip stocks in the past 18 months. If capex is lowered – I will publicly say I was wrong here.
Risk Warnings

Meta/Google capex lowered: The only signal that can overturn all the above judgments.
Brent breaks above $120 and sustains for over a month: Global recession risk rises significantly.
Micron's 81% gross margin is an extreme value; consumer demand shrinkage still faces NAND price correction risks.
Panic is not yet at its peak – CME shows only a 52% probability of no rate cut this year. If this number continues to rise, the VIX still has room to surge. The real bottom often comes after panic is overpriced.

What do you think? Last time the fear index fell to 15, it rose 25% six months later. This time, do you think the outcome will be the same or different? Pick a side in the comments.