WSJ Says Semiconductor Rally Is Earnings-Driven, Unlike Dot-Com Bubble

Korea Economic Daily

Summary

The WSJ said the rally in semiconductor stocks differs from the dot-com bubble because it is earnings-driven.
Over the past six weeks, the market capitalization of semiconductor companies in the S&P 500 has increased by about $3.8 trillion, while shares of Micron and Intel have posted sharp gains.
As earnings estimates for semiconductor companies have been revised sharply higher, some investors cautioned that the market is expensive, saying the most dangerous words are "this time it's different."

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The rally in semiconductor stocks differs from the dot-com bubble because it is grounded in earnings, The Wall Street Journal reported.

The market value of semiconductor companies in the S&P 500 has risen by about $3.8 trillion over the past six weeks, the Journal said in a May 9 report.

Over the past year, SanDisk has jumped 4,039.7%, while Micron has gained 769.8% and Intel 483.2%. The Journal attributed the surge to demand spreading beyond graphics processing units, or GPUs, to traditional central processing units, or CPUs, and memory chips as generative AI models evolve.

That has prompted sharp increases in earnings estimates for major chipmakers. Consensus forecasts for Micron Technology's fiscal 2026, which runs from Sept. 4, 2025, to Sept. 3, 2026, call for revenue of $107 billion and operating profit of $77 billion.

By contrast, during the dot-com bubble in the late 1990s and early 2000s, many of the companies whose share prices soared generated little or no profit, the Journal said.

Some investors are also warning that the current rally may be overdone. Peter Feinberg, a 64-year-old retired lawyer in San Francisco who owns Broadcom and TSMC, told the Journal that his portfolio has outperformed the S&P 500 in recent years and has climbed to what he called a "slightly surreal" level this year.

He said he plans to keep holding semiconductor stocks for now. "The most dangerous words in investing are, 'This time it's different,'" he added. "In my view, the market is expensive."

Han Kyung-woo, Hankyung.com reporter, case@hankyung.com