Semis are bleeding, and investors are buying the dip

The dip buyers are back

Semiconductor ETFs are having a very weird month: prices are tanking, but cash is flooding in. The iShares SOXX fund pulled in a record $6.13 billion month-to-date even as it fell 18.6%, while SMH saw another $2.06 billion pour in despite a 15.2% drop.

That’s not exactly a vote of no confidence in AI. It’s more like investors looked at the wreckage and said, “Yep, I’ll take two.” The message is pretty clear: the crowd still believes the chip supercycle is alive, even if the stock chart looks like it hit a pothole at 80 mph.

Why people are still piling in

Bank of America’s Vivek Arya basically framed the selloff as a summer reset rather than a thesis break. His argument: hyperscaler spending — the cash cloud giants pour into data centers — is still tracking toward $1.15 trillion in 2027, and the long-term AI buildout hasn’t vanished just because the sector got slapped around for a few weeks.

The bull case is simple:

• AI demand is still ramping
• big cloud customers keep spending
• semis are volatile, but the trend may still be up and to the right

But the bears have entered the chat

Not everyone is convinced this is a healthy pullback. Ed Yardeni points to forced selling overseas, margin stress in Samsung and SK Hynix, and a fresh scare from China’s Moonshot AI model launch, which revived the old fear that cheaper Chinese models could dent demand for pricey U.S. chips.

So you’ve got two stories fighting for your attention: one says this is just a bruising reset inside a secular boom, the other says the AI trade is getting a little too crowded for comfort.

Big picture: when a sector is bleeding and investors still keep feeding it cash, you’re either seeing conviction — or a very expensive case of FOMO.