Philadelphia Semiconductor Index

Indian IT stocks have rebounded while global AI trade faces challenges. The Nifty IT Index's correlation with the Philadelphia Semiconductor Index has reached its lowest level since 2018.

Michael Burry, a US hedge fund manager, increased bearish positions on AI-linked stocks including Nvidia and Micron Technology, as well as an ETF tracking the Philadelphia Semiconductor Index. Moody’s warned of debt risks from hyperscalers, raising concerns about China’s stock market support.

Michael Burry, known for his 'Big Short' success, has placed fresh short positions against Tesla, Caterpillar, Nvidia, Applied Materials, and the iShares Semiconductor ETF (SOXX). He argues the semiconductor index is overvalued and cited Caterpillar's stock as unsupported by its business fundamentals.

Bank of America advised investors to 'take profits' as seven of its 10 bear-market indicators were triggered, leading to a 7% Nasdaq drop and significant declines in the S&P 500 and Dow. Leveraged funds like Direxion Daily Semiconductor lost billions, while semiconductor stocks fell sharply due to Broadcom's cautious guidance and a memory glut.

The AI industry has cycled through phases of skepticism, mania, and reckoning as companies grapple with its costs and value. Firms like Uber, Amazon, and GitHub are reevaluating AI spending after discovering high expenses and limited returns, while market indicators like the Nasdaq and Philadelphia Semiconductor Index show investor uncertainty.

Chip stocks are experiencing significant gains, with the Philadelphia Semiconductor Index rising 75% in 2026 due to increased data center spending by Big Tech companies driven by AI demand.