U.S. Semiconductor Stocks Face Further 20% Decline Risk as Chip ETFs Plunge on Geopolitical Tensions

According to Business Insider, U.S. semiconductor stocks have come under severe pressure in recent weeks amid geopolitical risks and artificial intelligence trading rotation. The Invesco Semiconductor ETF (SOXX-US) has declined 18% from its late-June peak, with the broader VanEck Vectors Semiconductor ETF (SMH-US) trading 18% below its 50-day moving average.

Analysts hold divergent views on the outlook. Senior analyst Adam Kobeissi noted that despite the S&P 500 breaking key support levels, signs of technical stabilization emerged with the index's relative strength index rebounding above 50. However, Piper Sandler's research team warned that semiconductor and AI stocks face continued downside, potentially declining another 20% if the SMH ETF breaks its 200-day moving average. Meanwhile, Bespoke Investment Group highlighted unusual volatility in the Nasdaq-100, with over 20 trading days showing 1%+ daily swings over the past 50 sessions, a pattern historically associated with negative returns in the following six months.