All should know of the Philadelphia Semi-Conductors Index aka (“SOX”). It was created in the 1990s to track this important new part of the internet and PC.
Today, it’s being driven by excitement around the Artificial Intelligence infrastructure build out.
We hear from several of the big players this week and it will be important that they continue to grow the CapEx spend.
Any reversal or slowing in spending could be a catalyst to take some money off the table with markets at all-time highs and geopolitical risks still very elevated.
With earnings this week from Meta, Google, Microsoft and Amazon, a key will be their level of CapEx expected to be this year at about $650 billion run rate, which is over $1 trillion when combined with what was spent in 2025.
The Street is not expecting a slowdown, the ramp in the SMH suggests as much, but we could see a sell the news trade here. If maintained, it could be a reason for the semi trade to take a breather anyway considering the epic run.
Lesser, but also important, what are they saying about the consumer after the oil led inflation in March.
Our chart this week is the SMH that tracks the semiconductor sector. It’s presented in logarithmic scaling.
So the distance from 15 to 30 is the same 100 per cent increase as the move from 250 to 500. Historically, the sector has doubled up and then consolidated for an extended period.
Since the Tariff induced decline in 2025, the index has doubled. Could be time for another consolidation period. The time it has taken to double up has accelerated over the years. This most recent move has been breath taking.
