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The semiconductor rally keeps rewriting the tape.
The PHLX Semiconductor Index (^SOX) just notched a 17-day winning streak, but the group is now the most overextended since 2000.
Chip stocks have added more than $3 trillion in market value in only 17 trading days. Nvidia (NVDA) and Broadcom (AVGO) have done much of the lifting, with Taiwan Semiconductor (TSM) not far behind.
The dollar gains drop from there, but they still add up fast. Micron (MU), AMD (AMD), Intel (INTC), Texas Instruments (TXN), Lam Research (LRCX), Arm (ARM), Applied Materials (AMAT), Marvell (MRVL), and KLA (KLAC) have also added tens of billions of dollars in value during the run.
This is what makes the move so powerful — and so tricky. The rally is broad, but the biggest names are still doing an outsized share of the work, raising familiar concerns about market concentration.
One way to measure how overheated a group has become is to compare its price with its 200-day moving average, a long-term trend line investors often use to separate a stock’s normal trend from a stretch that may have gone too far.
By that measure, chip stocks are now the most overextended since 2000. That doesn’t mean the rally has to end tomorrow, but it does mean this run has entered territory most investors either never lived through or have long since forgotten.
That’s the catch with momentum this strong. The next move doesn’t have to be a collapse. A pause, pullback, or even a grind sideways — a so-called correction in time — may be all it takes to work off an extreme.
Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.
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