Philadelphia Semiconductor Index Falls Into Bear Market After 20.2% Slide From Record High

The Philadelphia Semiconductor Index, or SOX, has entered a technical bear market.

The SOX fell 1.6% on July 17, ending 20.2% below its record closing high set on June 22. An index is typically considered to be in a bear market when it drops 20% or more from a recent peak.

The index has slumped about 10% this week, its steepest weekly decline since April 2025. It has also fallen more than 18% in July. Even so, the SOX remains up more than 60% this year, well ahead of the S&P 500's gain of about 9% over the same period.

The latest selloff in chip stocks appears to reflect profit-taking in shares that had surged on enthusiasm for artificial intelligence. Nvidia fell 2.2% on July 17, while Intel and Applied Materials dropped 2.0% and 5.6%, respectively. Micron and SanDisk have each fallen more than 30% from their highs.

Investors are also growing more cautious on AI spending. Questions are mounting over whether the huge sums US big tech companies are committing to data centers and AI infrastructure will generate meaningful returns. Chinese AI startup Moonshot's unveiling of its low-cost, high-performance Kimi K3 model has further fueled debate over the efficiency of AI spending by US tech giants.

Tony Meadows, chief investment officer at BRI Wealth Management, said the correction reflects both profit-taking and a reassessment of the sustainability of AI capital spending. Semiconductor shares had been priced for near-perfect demand, he said, leaving the sector vulnerable to sharp declines if investor expectations ease even slightly.

Attention is now shifting to big tech earnings due next week. Alphabet is set to report quarterly results on July 22, followed by Microsoft, Amazon and Meta. Whether those companies can deliver profitability and outlooks strong enough to justify heavier AI spending may determine whether semiconductor stocks extend their slide.