Semiconductor stocks have experienced a brutal decline from their winning AI bet status, with the Philadelphia Semiconductor Index posting its worst week in over a year in July, and a nearly 20% drop in the SOXX/IGV ratio. In June, Micron, Intel, Super Micro and Sandisk each cratered more than 11%, while Intel, Micron and AMD fell between 5% and 8% on September 14 after AI leaders called for a slowdown in model development. This correction is not driven by deteriorating fundamentals since Micron continued to post exceptional earnings growth through mid-2026, but by concerns over excessive valuations and high interest rate pressure. The market is now considering a rotation into software stocks, viewed as more stable with their recurring revenue models.
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