Forecast Trend Report by Period
U.S. semiconductor stocks have surged about 60% over the past six weeks, fueling warnings of an AI bubble as retail money floods into the sector near recent highs.
BlockBeats, a cryptocurrency-focused media outlet, reported on May 11 that expectations for stronger artificial intelligence demand have driven the rally, with most components of the Philadelphia Semiconductor Index trading above their 200-day moving averages. Some technical indicators have surpassed levels seen during the 1999 dot-com bubble, the report said.
Morgan Stanley data showed U.S. retail investors bought technology stocks last week at the fastest pace in the past year. The inflows were concentrated in AI-related memory-chip and hardware companies.
Dave Mazza, chief executive officer of Roundhill Financial, said demand for AI infrastructure was confirmed during earnings season. Even so, the market has already priced in “perfect expectations,” with investors paying increasingly higher prices. He added that the current move is approaching a “parabolic rise.”
Chris Verrone, a strategist at Strategas Securities, said the pace of the semiconductor sector's advance is historically extreme. If the trend breaks, risks could escalate quickly.
John Kolovos, another institutional official cited in the report, said the semiconductor index is trading about 57% above its 200-day moving average. Similar cases occurred only in 1995 and 2000, and both were followed by clear corrections, he said.
Still, some Wall Street firms view outright short bets on semiconductor stocks as risky at this stage. Alexander Altmann, head of strategy at Barclays, said market sentiment is overheated, but there are no signs yet of a full-scale breakdown. Shorting SMH now is “almost akin to self-harm,” he said.
The semiconductor sector continues to climb on AI enthusiasm, but signs of technical overheating and concentrated retail inflows are also raising the prospect of greater short-term volatility.
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.
