QQQ
SOXX
The chip party hit a wall
For months, semis were the market's favorite overachievers — the kids who skipped leg day, ran a marathon, and still got called “undervalued.” Not anymore. The iShares Semiconductor ETF, tracked by SOXX, has dropped 13.2% in the past four weeks, its sharpest slide since April 2025.
That move matters because the sector’s big valuation cushion has basically disappeared. Semis are now trading at about the same forward P/E as the Nasdaq 100, around 24x, after spending late June as the pricey kid at the lunch table with a premium north of 32x.
Why the music stopped
Three things are doing the most damage here:
- Investors are getting twitchy about AI capex and whether hyperscalers keep pouring money into data centers at the same pace.
- China’s memory market could get more crowded after CXMT filed for a nearly $10 billion IPO in Shanghai.
- After a monster run, a lot of traders just took the chips-and-dip profit and walked away.
Cheap, or just less expensive?
The argument for semis now is simple: the PEG ratio for SOXX has fallen to 1.26x, the lowest since 2016, and below QQQ’s 1.56x. In other words, you’re paying less for faster growth — at least on paper.
Micron is the poster child for the debate. It’s up a jaw-dropping 654% over the past year, but still trades at just 6.8x forward earnings. Analysts, meanwhile, are not exactly waving red flags; the consensus target sits well above the recent close, and every rating action since June 25 has been an upward tweak.
Big picture
This is what happens when a trade gets too crowded and too loved: the floorboards squeak. If AI spending stays hot, semis may just be taking a breather. If not, this could be the first sign that the market is rethinking just how much growth it already priced in.