Semiconductor rally hits dot-com bubble extremes, raising durability fears

The semiconductor complex has entered uncharted territory, mirroring the euphoria of the late-1990s tech bubble. As of May 2026, the SOX Semiconductor Index sits 147 percent above its 200-week moving averageAverage price over a defined period; smooths noise to show trend. with a weekly relative strength index reading of 85.7, levels last seen in March 2000 when the dot-com crash wiped trillions in value. The catalyst is AI-driven demand for memory chips and GPUs, with memory manufacturers projecting a multiyear supercycle and margin expansion through 2027. Micron, SanDisk, and AMD have all surged sharply on supply-shortage narratives. Yet skeptics point to circular investment: Nvidia itself is funding buildouts of infrastructure partners like CoreWeave, Iren, and Corning, raising questions about whether these capex cycles will generate durable returns or collapse once capital saturation hits. A contrarian wave of bearish positioning has emerged. Investors are loading up on the 3x Leveraged Semiconductor Bear ETFExchange-Traded Fund - a basket of securities trading like a single stock. (SOXS), which attracted a record 2.4 billion dollars in inflows in April alone, the largest monthly intake since inception. Volatility compression in software and SaaS names like Elastic, CoStar, and Figma suggests some traders are hedging expected tech mean reversion. Nvidia remains expensive on any reasonable metric, and with earnings later in May, a miss or cautious guide could spark a sharp pullback across the entire complex.