Chip stocks approach bull market as analysts express concerns

Chip stocks are having a year that would make most sectors jealous, then immediately nervous. The Invesco PHLX Semiconductor ETF (SOXQ) delivered roughly 60-70% in year-to-date returns as of early-to-mid August 2026, after briefly touching gains near 100% earlier in the year. That kind of run gets attention. It also gets scrutiny. The fuel behind the rally is no mystery: artificial intelligence infrastructure spending has created what amounts to a permanent state of demand emergency for semiconductors. Every hyperscaler building out data centers needs chips, and lots of them. That simple equation has propelled names like Nvidia, Broadcom, and AMD into the center of what Bank of America now projects will be a $1.3 trillion global semiconductor revenue year in 2026. What the July sell-off revealed Then came July. The PHLX Semiconductor Index (SOX) dropped more than 20% from its peak during a broad sell-off, technically pushing the index into bear-market territory from those highs. Hedge funds responded by trimming their exposure to momentum and chip positions by roughly 5%. The concern is not just about price. It is about the chain of logic holding the whole thesis together. Semicond...