For the first time since late April, semiconductors no longer carry a valuation premium over the broader Nasdaq. The sector that doubled off its February low is now priced like the average large-cap tech stock.
The Philadelphia Semiconductor Index – as tracked by the iShares Semiconductor ETF (SOXX) – has fallen 13.2% over the past four weeks. That is the sharpest four-week move for the fund since April 2025.
Measured from the late-June peak, the drawdown is closer to 15%.
The slide follows an extraordinary run. From its February low, SOXX gained 102.6% into the late-June high. The fund is still up 84.6% year-to-date, against 17.1% for the Invesco QQQ Trust (QQQ).
Why SOXX Sold Off
Three forces drove the reversal.
The first is growing uncertainty around AI capital spending — the money hyperscalers commit to building data centers, which has been the single largest source of chip demand for two years. Investors have started questioning how long that spending stays at current levels.
The second is rising competition from China. Chinese memory maker CXMT filed to raise close to $10 billion in a Shanghai initial public offering, a signal that supply in the memory market may be about to expand. Memory-related names led the group lower.
Layered on top of both: profit-taking after several names inside the sector went parabolic.
Are Chips Cheap Now?
The forward price-to-earnings ratio — what investors pay today for each dollar of profit a company is expected to earn over the next year — has fallen to 24.7 times for SOXX. That is roughly in line with its three-year average.
More importantly, it is now level with the Nasdaq 100 at 24.0 times.
That convergence matters. Since late April, semiconductors traded at a clear premium to the broader index, peaking above 32 times in late June. That premium is gone. Investors are no longer paying extra for chip earnings relative to big tech earnings.
A second valuation gauge tells an even sharper story.
The PEG ratio — the price-to-earnings ratio divided by the expected growth rate, which asks how much you are paying for each unit of growth — sits at 1.26x for SOXX. That is the lowest reading since 2016.
The QQQ PEG is 1.56x.
Read plainly: semiconductors are now expected to grow faster than the broader tech index, while costing less per unit of that growth. The market is pricing chips as the cheaper growth story for the first time in a decade.
Whether that is an opportunity depends on whether the growth estimates hold.
Is Micron Cheap Enough After a 650% Rally?
Micron Technology Inc. (MU) is the best-performing holding in SOXX over the past year, up 654% and trading at $904.28 as of the July 14 close.
Behind it: Intel Corp. (INTC) at 349%, ASE Technology Holding Co. Ltd. (ASX) at 299%, Astera Labs Inc. (ALAB) at 280% and Teradyne Inc. (TER) at 269%.
Yet two indicators screen Micron as cheap, not expensive.
The stock trades at 6.8 times forward earnings. Its own long-run average is 16.8 times. Micron is priced at roughly a third of what investors have historically paid for its future profits.
What Wall Street Says on Micron
Analysts are not pricing a decline.
MarketDash tracks 100 analyst ratings on Micron. Zero are downgrades. Every rating action since June 25 has been a price target increase.
The consensus price target stands at $1,316.79, or 45.6% above the July 14 close. The high target is $2,000. The low is $385.
The consensus rating is Buy.
Keybanc lifted its target to $1,750 from $1,600 on July 14 while maintaining an Overweight rating, the same session the stock fell 8%.
Cantor Fitzgerald, Barclays, DA Davidson and Susquehanna all carry $2,000 targets.
Even the holdout moved. Goldman Sachs maintained a Neutral rating on June 25 — and raised its price target to $1,100 from $900. Its most bearish case still implies upside.
Morgan Stanley sits at $1,200, Citigroup and Wedbush at $1,400, Mizuho at $1,375, Deutsche Bank at $1,550, Wells Fargo at $1,525, Raymond James and RBC Capital at $1,500 and TD Cowen at $1,600.
