The PHLX Semiconductor Index , known as the SOX index, closed below its 200-day moving average on Friday for the first time since May 2025, a sharp reversal for one of the market’s key AI trades. The index is now roughly 40% below its June 22 high, according to BTIG. The break followed broad selling and an unwind in semiconductor and AI stocks, and comes at a time when investors are questioning whether huge data center spending will ever generate sufficient returns to justify the investment. Past breaks have sometimes produced forceful rebounds, but the longer-term record looks less encouraging, according to Jonathan Krinsky, chief market technician at BTIG. “Similar initial cracks did see some strong bounces, but it’s essentially a coin-toss,” Krinsky wrote in a note on Sunday, adding that 50-day returns have historically been negative. BTIG analysis shows during comparable breaks since 1995, the SOX fell an average of 0.8% over the next five trading days before generating average gains of 4.25% after 10 days, 3.09% after 20 days, 2.95% after 30 days and 0.77% after 40 days. By the 50-day mark, however, the index was higher in only 44% of cases. The average SOX return in all measured periods was negative 0.32%, while the median decline was 2.47%. While it’s a bit late to press tactical downside at current price levels, Krinksy said, the bigger issue is that investors who bought semiconductor stocks between May and October are now underwater. “That’s six months of overhead supply, and unlikely to be overcome anytime soon,” he said. “Ultimately, we continue to think a move back to the April breakout point (8k-8300) is necessary as that would completely retrace the parabolic advance.”
