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Semiconductor index SOX plunges as AI chip rally loses steam
SOX fell 21% in July and saw at least 2% intraday swings on all 22 sessions, its highest volatility since 2020.
Wall Street’s one-way push into semiconductor stocks has turned choppy, with volatility rising as investors question whether heavy artificial intelligence spending will keep accelerating, LiveMint Markets reported. The Philadelphia Stock Exchange Semiconductor Index, or SOX, sank 21% in July, its worst month since October 2008 during the global financial crisis.
The index, which tracks 30 major chipmakers, closed up or down by at least 4% on nearly half of July’s trading days. It also logged intraday swings of at least 2% on every one of the 22 sessions, a pattern last seen in 2020, underscoring how quickly expectations have shifted.
LiveMint Markets said the pullback reflects increased scrutiny of big-tech capital expenditure plans, along with concerns about competition and the spread of open-source AI models that can be cheaper and require less infrastructure. Even after a two-day rally of 8.3% late in the month, SOX remained down 23% from its June 22 record high, with every index stock negative over that span.
The article also pointed to wider pressure across AI-linked equities after July’s decline. It said the hedge fund Situational Awareness, led by Leopold Aschenbrenner, was forced to sell billions of dollars of tech shares to meet margin calls after those positions rapidly lost value.