Software stocks widen record gap over chips as sector rotation deepens
This digest was compiled by AI from multiple sources — links to the originals are below.
Software stocks have surged while semiconductor shares tumbled since June 22, creating the widest two-month performance gap on record. The equal-weight SPDR S&P Software & Services ETF rose about 24% over that span, while the equal-weight SPDR S&P Semiconductor ETF fell about 24%. The divergence has added roughly $1.5 trillion to software market value and erased about $2.6 trillion from chips.
Key Facts
- The equal-weight SPDR S&P Software & Services ETF (XSW) is up about 24% since June 22, while the equal-weight SPDR S&P Semiconductor ETF (XSD) is down about 24%.
- Microsoft alone has added nearly $900 billion in market value since the June 22 turning point.
- Micron, Taiwan Semiconductor Manufacturing, Arm, and AMD have collectively shed roughly $950 billion over the same period.
- From June 22 through Friday, the S&P North American Technology Software Index gained about 19%, while the Philadelphia Semiconductor Index fell about 20%.
- Nvidia reports earnings on Wednesday after trading roughly sideways for four months.
The Sector Divergence
Chip stocks peaked on June 22, while software stocks bottomed around the same day, kicking off a multitrillion-dollar reversal that has sent the two groups in almost perfectly opposite directions. The equal-weight SPDR S&P Software & Services ETF (XSW) is up about 24% since then, while the equal-weight SPDR S&P Semiconductor ETF (XSD) is down about 24%. That near-50-percentage-point gap is the widest comparable software-over-chips move in the ETFs' history back to 2011. In a Yahoo Finance basket of 45 software stocks, 37 are higher since June 22, while among 60 chip stocks, 59 are lower.
Market Value Shift
Microsoft alone has added nearly $900 billion in market value since the turn. Micron, Taiwan Semiconductor Manufacturing, Arm, and AMD have collectively shed roughly $950 billion. Across the full comparison, software has added about $1.5 trillion while chips have lost roughly $2.6 trillion. Longer-term index data shows the S&P North American Technology Software Index gained about 19% from June 22 through Friday, while the Philadelphia Semiconductor Index fell about 20%.
Nvidia's Earnings Test
Nvidia had its worst day since July on Monday, yet the stock has gone essentially nowhere for roughly four months, even as the broader chip trade rolled over. At several points during the selloff, Nvidia held up more like the megacaps that were dodging the chip wipeout than the semiconductor group around it. Nvidia first traded at its current price in late April. Nvidia reports earnings on Wednesday, and its ability to keep defying the sell-off is about to get a major test.
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Software stocks widen record gap over chips as sector rotation deepens
