Semiconductor stocks are experiencing a dramatic valuation reset, potentially creating an opportunity for investors seeking exposure to the AI trade through ETFs. 7x on October 30, down from approximately 33x a year earlier, according to LSEG data.
9x, reversing the premium semiconductor stocks commanded during much of the AI rally. The correction has hit semiconductor ETFs particularly hard.
98%. 30%.
6%, respectively, during October. Read Also: Black Friday Came Early for Chipmakers: Intel and 10 Other Stocks Are More Than 20% Off This Month SOXX Vs.
SMH: Portfolio Concentration Matters The selloff also highlights differences in how semiconductor ETFs distribute their exposure. 58%.
Its exposure to Nvidia and AMD makes it particularly sensitive to weakness among these chipmakers. 5%.
SMH, with 26 holdings, is considerably more concentrated in leading semiconductor companies. 34%).
07% of SMH’s portfolio. XSD offers a different approach through a more evenly distributed portfolio.
30% single-day decline on Friday demonstrates that diversification within the semiconductor industry cannot eliminate sector-wide risks. Is the Valuation Reset a Buying Opportunity?
The latest correction followed disappointing guidance from Intel, alongside growing concerns about the sustainability of massive AI infrastructure investments. 2%.
For SOXX, resistance levels appear to be forming near the $530 mark, according to Benzinga Pro, where the stock has previously encountered selling pressure. If the price can break through this level, it may signal a shift in momentum, potentially attracting more buyers and leading to further gains.
10, which may serve as a critical point for buyers looking to enter the market. Should the price dip below this level, it could trigger further selling pressure, pushing the ETF closer to the lower end of its 52-week range.
49, where the ETF has struggled to maintain upward momentum. A sustained break above this threshold could signal a shift in market sentiment and potentially attract more bullish investors.
However, technical indicators analyzed by Benzinga suggest that SMH is in a cautious position. While it has shown resilience above the recent support level, the distance to resistance suggests further bullish momentum will require stronger catalysts.
Bottom Line For semiconductor ETF investors, the decline in forward valuations could present an opportunity if earnings growth remains resilient. However, a lower P/E does not automatically mean stocks are undervalued.
Downward revisions to earnings estimates could undermine the apparent valuation discount. The next catalysts will be hyperscaler capital expenditure plans, semiconductor earnings revisions and demand trends across AI chips, memory and data-center infrastructure.
For SOXX, SMH and XSD investors, the key question is no longer whether semiconductor valuations have corrected, but whether earnings can justify buying the sector at these lower multiples.
