Chip Stock Surges 60% in 6 Weeks, Retail FOMO at All-Time High Sparks 'AI Bubble' Concern
BlockBeats News, May 11th, as the AI boom continues to boost the semiconductor sector, US chip stocks have surged by about 60% in the past six weeks. However, several institutions have begun warning that the market is approaching a "parabolic rise" phase. At the same time, a large amount of retail funds that were previously on the sidelines have recently flowed back into technology and chip stocks.
JPMorgan data shows that last week, US retail investors' buying activity in technology stocks rose to the highest level in the past year, with a particular interest in AI-related memory chips and hardware companies. Driven by funds, the majority of SOX component stocks are still above the 200-day moving average, with some technical indicators even exceeding those of the 1999 Internet bubble.
Roundhill Financial CEO Dave Mazza stated that the demand for AI infrastructure has indeed been validated during the earnings season, but the market is increasingly paying a higher price for "perfect expectations." He warned that the continued chasing of highs is pushing the semiconductor market closer to an uncontrollable parabolic trajectory.
Strategas Securities strategist Chris Verrone pointed out that the current chip sector's rate of increase has reached historically extreme levels. Once the trend reverses, the risk could quickly escalate. Another institutional figure, John Kolovos, stated that the current semiconductor index is about 57% above the 200-day moving average. Similar situations have only occurred in 1995 and 2000, both followed by significant pullbacks.
However, some Wall Street institutions still believe that directly shorting chip stocks at the moment carries extremely high risk. Barclays' Head of Strategy, Alexander Altmann, said that although market sentiment has significantly heated up, there are no signs of a widespread loss of control yet, and shorting SMH now is "almost equivalent to destroying one's own prospects."
