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Semiconductor index surges but turns volatile after big AI chip gains
S&P 500 semiconductor and equipment earnings are forecast to rise 133% year over year in Q2, but the PHLX Semiconductor index is off 18% in July after swings of at least 3 percentage points on half of the month’s trading days.
Chipmakers remain a key driver for Wall Street, with investors looking to a concentrated group of recently strong performers to deliver nearly half of the S&P 500’s second-quarter profit growth. Still, Reuters reports the PHLX Semiconductor index has turned highly volatile, gaining 65% this year but down just over 18% for July after large up and down moves on many days.
The semi sector’s strength has been tied to optimism around AI-related chip demand, but concerns about how durable that demand is have led investors to reassess the group’s outlook. Reuters notes the PHLX Semiconductor index ended Friday down more than 20% from its late-June all-time closing high.
Earnings expectations remain elevated: LSEG data cited by Reuters show S&P 500 semiconductor and semi equipment earnings are forecast to rise 133% for the second quarter versus a year ago, and the group is expected to contribute about 44% of overall S&P 500 earnings gains. For comparison, Reuters adds that S&P 500 overall earnings are forecast to rise 26% in Q2 year over year.
Some recent results have also highlighted how quickly sentiment can change. Reuters points to Taiwan Semiconductor Manufacturing shares dipping despite a 77% jump in second-quarter net profit that beat forecasts, and to Samsung Electronics shares falling sharply despite a 19-fold jump in second-quarter operating profit. Reuters also says Intel and Texas Instruments are due to report this week, while Nvidia’s results are scheduled for late August.
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