A monthly loss last recorded during the dot-com unwind has returned to the semiconductor complex, and it arrived while the sector’s earnings estimates were still rising.
The iShares Semiconductor ETF (NASDAQ:SOXX) closed July down 21.2%, its worst month since December 2002, according to Koyfin data. Nearly 24 years separate the two prints.
Every month worse than this one in the fund’s history belongs to the 2001–2002 collapse.
The S&P 500 finished the same month flat.
This sharp selloff semiconductor stocks prompted veteran Wall Street strategist Ed Yardeni to declare that tech is now “on sale,” with semiconductor shares trading at a “significant discount” to the broader market.
What the Tape Actually Did
Only three SOXX holdings ended July in positive territory:
- Monolithic Power Systems (NASDAQ:MPWR), up 3.16%
- Broadcom (NASDAQ:AVGO), up 3.05%, and
- Nvidia (NASDAQ:NVDA), up 0.33%.
Everything built to feed data center was sold.
- KLA Corp. (NASDAQ:KLAC) fell 39.41% — its worst month in recorded trading history, going back to 1980.
- Marvell Technology (NASDAQ:MRVL) lost 37.04%.
- Astera Labs (NASDAQ:ALAB) fell 35.57%
- Intel (NASDAQ:INTC) fell 35.40%
- Lam Research (NASDAQ:LRCX) fell 32.38%
- Applied Materials (NASDAQ:AMAT) fell 29.78%
- Micron Technology (NASDAQ:MU) fell 28.70%.
The dispersion inside a single sector is the tell.
Yardeni Research data shows Systems Software gained 17.9% month-to-date through July 31 while Semiconductor Equipment lost 32.5% — a 50-point gap between two industries filed under the same S&P 500 sector heading.
The sector had roughly doubled in the first six months of the year.
Why the Multiple Fell Faster Than the Price
“The S&P 500 Semiconductors industry is selling at a significant discount to the market with a forward P/E of 15.9,” Ed Yardeni wrote on Sunday.
“It has dropped in recent weeks as forward earnings rose faster than stock prices fell. None of the selling was driven by a deteriorating outlook.”
Wall Street expects second-quarter semiconductor and semiconductor equipment earnings to grow 131% year over year, according to FactSet, against 23.6% for the S&P 500 as a whole.
Samsung Electronics confirmed the demand picture on July 30. Operating profit rose 56% sequentially to 89.5 trillion won, a company record and roughly nineteen times the year-ago figure.
“Comparisons to the 1999 Tech Bubble are looking less and less credible,” Yardeni added.
One Fund, Three Prime Brokers, Thirty-Four Stocks
July had a mechanical seller, according to Yardeni
Leopold Aschenbrenner‘s Situational Awareness grew from $225 million to $45 billion in under two years and ran roughly four times leverage.
Goldman Sachs, JPMorgan and Bank of America issued margin calls. Citadel bought the entire public book in a single trade on the morning of July 30.
Yardeni’s account of it was blunt: “Apparently, Leo was unaware of the risks of leverage bets in the stock market.”
His largest positions — Nebius Group N.V. (NASDAQ:NBIS), SanDisk Corp. (NASDAQ:SNDK), Micron Technology Inc. (NASDAQ:MU) and CoreWeave Inc. (NASDAQ:CRWV) — all fell more than 15% in the month.
“July was a good month to be long software and short semiconductors,” Yardeni wrote.
“Leo was on the wrong side of both trades.”
Once the overhang cleared, Micron rose 18% and SanDisk 26% in a single session.
Semiconductor Equipment gained 13.6% that day. The SOX recovered 8.3% across two sessions and still sits 23% below its June 22 peak.
Volatility, not fundamentals, wrote the July tape.
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