The semiconductor trade, one of the market's biggest winners of the past year, has hit a wall.
The VanEck Semiconductor ETF, which trades under the ticker SMH and holds a basket of the industry's largest chipmakers, has fallen nearly 18% in the past month, according to a report from Newsbytes. That drop reverses a chunk of what had been a roughly 75% surge over the previous year.
A widely shared LinkedIn post surfaced through Google News puts the fund's one-year gain at roughly 75% to 83% even after the slide, and lists three drivers behind the pullback: weak AI chip guidance from Broadcom, a memory chip price crunch, and reports that China is closing the gap in chip capability. Newsbytes similarly points to Broadcom's AI warning, soft AI chip demand, and broader worries about the sector.
The damage extends past the ETF itself. A commentary piece published on MSN says semiconductor stocks are down 22%, and frames the decline as "an incredible opportunity for investors" — a reminder that not everyone reads the selloff as a warning sign.
The two numbers together tell the story: a violent month inside a still-enormous year. Investors who bought a year ago are largely still ahead; investors who bought at the peak are not.
Why it matters: chip stocks have become the market's main proxy for how much money the AI boom will actually make, so an 18% drop on one company's guidance shows how much of that optimism was riding on demand forecasts rather than delivered profits.