Chip stocks fell sharply this week amid rising geopolitical tensions, higher energy prices, and renewed concerns about interest rate hikes. The PHLX Semiconductor Index (SOX) is down 8% week‑over‑week and 17% month‑over‑month, threatening a three‑month winning streak. The Roundhill Memory ETF (DRAM) dropped 17% this week, and the VanEck Semiconductor ETF (SMH) fell 7%. Wall Street is watching for signs of weakening demand and a pullback in capital expenditures, which may indicate the end of the artificial‑intelligence investment boom, yet analysts have not confirmed such a shift. Some observers argue that chipmakers’ earnings growth remains strong and that the sector still has room to run to support the broader market. UBS projects a 92% earnings increase for the Philadelphia Semiconductor Index this year and an additional 40% growth in 2027, underscoring its constructive outlook. Ulrike Hoffmann‑Burchardi, global head of equities at UBS, notes a persistent mismatch between computing‑power demand and supply, with supply‑chain constraints unlikely to ease soon. Barclays’ trading desk said there are no signs of panic in the semiconductor market and that investor interest is growing regarding the timing of a sector rebound, describing recent selling as passive trimming rather than aggressive exits. In June, the global semiconductor market was projected to grow 90% in 2026 and 27% in 2027, according to the World Semiconductor Trade Statistics (WSTS), with sales up 119% in May after a 106% increase in April. Deutsche Bank strategist Maximilian Uleer warned that the uncertain outlook and the sector’s recent contribution to equity performance raise questions about how to position semiconductor stocks. Ohsung Kwon at Wells Fargo noted that semi sentiment experienced one of the sharpest four‑week declines in history.
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