Semiconductor and AI-linked stock valuations have become excessively stretched to levels unseen since the dot-com bubble, indicating a speculative bubble.
Early and rising — still a small slice of coverage but gaining +1pp over the last 3 days. This is where attention may be headed next.
Michael Burry has been cited drawing comparisons between current semiconductor valuations and dot-com era excess, sharing data showing the Philadelphia Semiconductor Index trading at historically elevated multiples. Adding to the concern, the iShares Semiconductor ETF has experienced a roughly 68% rally in just three months, even as it pulled back around 7% in a single week, a pattern that reflects the kind of sharp, momentum-driven price action typically associated with speculative excess.
When a sector experiences parabolic price appreciation in a compressed timeframe, it tends to attract heightened scrutiny around valuation sustainability, which can trigger rapid multiple contraction if growth expectations are revised even modestly, making the sector disproportionately sensitive to any shift in risk appetite.
"Burry argued that semiconductor valuations have become excessively stretched, sharing a chart showing the Philadelphia Semiconductor Index trading at its widest premium to its 200-day moving average since the dot-com bubble."
"The iShares Semiconductor ETF has fallen around 7% in one week but has rallied more than 68% in just three months, tracking the sharp rally in semiconductor stocks. Michael Burry refreshed his short position in iShares Semiconductor ETF."