Semis are still soaking up cash, warning signs be damned

The chips keep flying

If you thought a cycle-peak warning would scare people away from semiconductors, the flows say otherwise. Investors are still stuffing billions into chip ETFs, including the gloriously reckless 3x bull fund SOXL, even as Fidelity’s Jurrien Timmer says the sector may be getting close to the top of its 40-month earnings rhythm.

The money says: not so fast

Here’s the weird part: the prices may have wobbled, but the cash kept coming.

• SOXL pulled in about $4.53 billion in net inflows over the past month, even while its assets shrank thanks to wild price swings.
• SMH added roughly $1.04 billion in fresh money.
• SOXX brought in about $1.53 billion.

That’s the market version of saying, “I know this roller coaster looks sketchy, but let me ride it again.”

Why investors should care

Timmer’s point is basically that semiconductor earnings don’t run in a straight line forever. He says the industry tends to move in a roughly 40-month cycle, and the current stretch may be approaching the point where momentum starts to fade.

That matters because semis are the engine room for a lot of the AI trade. If the cycle peaks, today’s favorite momentum names could go from “unstoppable” to “uh-oh” faster than you can refresh your portfolio app.

Big picture

For now, the dip-buying machine is still alive and well. But when speculative flows stay sticky this late in the cycle, investors may want to ask the awkward question: are they buying a trend, or are they already standing in the exit line?