Chip Stocks Peaking

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The chips have peaked and are starting to roll over. When we last wrote about the chips (ETF: SOXX) we called the exact breakout of the 2-month consolidation. Since then, the stocks have had an incredible run, up nearly 30% to the highs and outperforming the Nasdaq by a hefty margin.

During this time, we saw euphoric activity for these stocks. Key chip companies made key announcements, including AMD’s deal with OpenAI, Nvidia’s GTC conference announcements, and the US government buying Intel. The AI frenzy was in full force.

Today, the mood is much more sanguine. Oracle’s report this week raised questions about the sustainability of the AI bubble. Broadcom’s report suggested that returns on capex investments would come later than expected. Investors are recalibrating key assumptions around the AI buildout.

Nvidia’s weekly chart is in a minor downtrend, down on 5 weeks since the beginning of Nov. Even this week’s news that Trump would allow them to sell chips to China could not get the stock to bounce. NVDA is supposed to be the poster child of the AI bubble. So if it can’t get going, there are structural concerns in the theme.

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