Shares of microprocessor giant Intel are up 209% this year. From its previous peak in June 2000, the stock had fallen a whopping 76% even as the SMH ETF rose nearly 1,180%. Shares of SanDisk, the flash drive and solid-state drive maker, are up 478% this year and a parabolic 5,190% since their lows in April last year.
Last October, I wrote about an artificial intelligence (AI) bubble in the stock market that was about to pop. By the time 2026 came around, the “bubble” narrative had faded, in part because key AI-related stocks were no longer rising at the giddy pace they were months earlier. At the end of March, the US stock benchmark, the S&P 500, was down over 7% from the start of the year. It is currently trading up 10% for the year. The stock barometer is up 112% since the introduction of the AI chatbot ChatGPT in late 2022.
For chip stocks, however, it is starting to feel like a real melt-up. The VanEck Semiconductor ETF (SMH), which represents the broader chip sector, is up 59% this year and 589% since it bottomed in October 2022. Here is how important the chip sector has become to the US economy: The semiconductor ecosystem accounted for just 6% of the S&P 500 in April last year; it now represents over 23% of the index, compared with 3.2% for the entire oil and gas sector.
