Chips are basically running the market now

Chips: the new gravity

If the stock market had a main character right now, it might be semiconductors. According to The Kobeissi Letter, chipmakers now account for a record 41.9% of the total market cap in the S&P 500 information technology sector. That’s not a typo. That’s Wall Street saying, “Yes, please, more silicon.”

AI is the amplifier

This isn’t just a vibes rally. The bull case is that AI spending is still early enough to keep pumping demand through the chip supply chain, from the names making memory to the ETFs that own the whole parade.

A few numbers tell the story:

• Semiconductor stocks have more than doubled their share of tech market cap since the 2022 bear market
• Their slice of forward EPS in tech has hit a record 47.1%
• The S&P 500 semis sub-industry index is up about 27% over the past month
• SOXX and SMH pulled in a combined $5.5 billion in April, a record monthly haul

That’s a lot of money chasing a pretty small club.

Everyone’s crowded around the same table

The concentration is the part investors should keep an eye on. When one corner of the market becomes the whole story, it can look amazing on the way up and a little too cozy on the way down. Micron, Western Digital, SanDisk, and the big ETF wrappers are all riding the same wave.

And sure, the AI capex cycle may still have legs. But when a sector starts looking like the market’s North Star, you should probably ask whether it’s guiding returns or just pulling everyone into its orbit.

Big picture: chips are no longer just a piece of tech — they’re increasingly the thing holding tech up, and maybe the thing investors are using to explain everything else.