The Semiconductor Rally Pushes Higher Despite Rising Valuation And Momentum Risks

The chip rally has been so relentless that it’s starting to unsettle even the bulls. The PHLX Semiconductor IndexSOX

just capped a record 17-day winning streak, climbing 41% in its fastest run since rebounding off the 2002 bear market bottom. The move is being driven by heavy buying into the AI infrastructure trade, pushing valuations and momentum into increasingly stretched territory.

• AI-driven demand kept the rally going after earnings, lifting IntelINTC
  , NvidiaNVDA
  , BroadcomAVGO
  , and Advanced Micro DevicesAMD
  higher.
• TheSOX
  is 40%+ above its 200-day moving average — the widest gap since the dot-com peak, while its RSI, a momentum gauge, sits at 81.98, signaling deep overbought territory.

The long haul: At BTIG, Jonathan Krinsky admits he’s been on the wrong side of semiconductors and says their strength has “only intensified” beyond expectations. He still warns that theSOX

shows “textbook parabolic price action” that typically reverses sharply. Even so, history shows that overbought phases can still deliver ~22% returns over the following year. That backdrop keeps the longer-term AI trade intact, even as near-term risks continue to build.