The Semiconductor Bubble is about over-valuation and momentum, outstanding fundamentals will not stop the correction to come
Note: Never will you read one word of my material that has been edited or altered, let alone written by, AI. It is unfortunate that this even needs to be stated, but it’s out there, folks. Content written by machines. Outside of ‘quant’, you cannot automate real market analysis.
Harken back, if you will, to a time some hazy years ago that I sold Nvidia too soon and neglected to buy it back on its long journey upward, leading the Semiconductor bubble to come by a country mile. I since traded it a couple times, but the real money had been made by others.
NVDA kicked the door down, and the Semiconductor sector eventually walked on through. This monthly chart looks a lot like the chart of a certain yellow rock that led the 2025 broad bull market phase, eh? Said yellow rock was due for, and got, a significant correction. Said Semiconductor bubble will also get corrected. Hard.
“Bubble” does not mean illegitimate. The Semi sector, the nerve center of a multitude of sectors and industries from medical equipment to killing machines, is now critical to life (and death) as we, a modern society, know it. But the chart above implies pure momentum; fear of missing out by casino patrons, professional and retail alike.
The public is on the job, chasing Semi higher, just as it did a certain yellow rock in 2025.
Before the upside explosion, the trick for me had been to find “me too!” plays (to Nvidia), and that began with ALAB, affectionately known as Skylab in my mind, back in 2025.
This richly valued supplier to Nvidia and the Hyperscalers must keep wowing them at earnings or it will pancake. While I successfully traded its swings a couple times, my most recent positions were added on the 2026 correction (it is so not a buy now). Despite the big shot upward, I hold still. That hold could be measured in hours, days, weeks or longer.
As a side note, NFTRH subscribers are kept abreast of my investments, holdings (good and bad alike) and rebalancing/rotations based on market internals. Anyone who wished could have bought ALAB and registered today’s paper profits of 187% and 147% (my two positions). I don’t recommend stocks because I am not formally trained as a stock analyst. But I sure do show my positions as a way to illustrate how I am marrying NFTRH top-down macro work with actual positioning.
Astera Labs is a great company with 104% growth TTM, but at a price (to sales of 44). That’s nosebleed valuation demanding 100% growth continue. It likely won’t. Since we got through earnings I am holding for now. If earnings were still ahead I’d sell this spike.
Next came MRVL. This is a company that, as I recall, had some bumps and issues along the way within its customer base (Amazon, Apple as I recall?). Regardless, it finally got its piece of the AI pie and zoomed upward. I took that well-earned profit.
A couple other “me too!” plays started getting their AI focus in order.
QCOM was added, sat with for a bit, and eventually sold near the top of the first surge. It remained on watch, and after a quick in/out for no gain on a day I felt risk management was in order, it was added back last week on the sharp pullback (bull flag, note its declining volume) per an NFTRH subscriber note last week:
Then boom, new highs. It’s not often that simple. But sometimes it is.
Qualcomm is making solid strides in its internal shift in (AI) direction. As apparently is SYNA, which I added as a “me too!” to the the “me too!”, AKA Qualcomm. I sold the upside spike on earnings and have the regret to show for it. Just kidding, but not really. It’s all psych, baby.
Odds & Ends
As part of this bubble, I quickly shorted INTC, which is out over its skis at a price/sales of 11+ and 1.4% TTM growth. I keep a small trading account for day trading and this one was successful as the pig got cracked hard (before recovering and going back on watch for another potential short).
This article would be incomplete without mentioning premier global Semiconductor equipment play, ASML. It’s got a massive technological moat and is hard wired into the global Semi market, by default. I hold it in my “savings” account as one of the pillars, along with other large, more stable market leaders of varying industries.
ASML may be the world’s most important Semi company, save for NVDA. At a P/S of 15+ and TTM growth of 25%, it’s also not as overvalued as many others.
And it’s not nearly as technically bubbly as its Semi cousins. The chart pattern targets the 1800 area. Maybe that will be the time the correction arrives. That is pure speculation, but it’s coming, folks.
I hold and have traded other stocks that have AI-driven rationale. That includes network stocks and explorers/producers of commodities vital to the AI data-center build out. Indeed, after Semi blows out I think there is a very good chance that the bull market in critical minerals and other commodities will gain more steam and lead the next phase.
Typical of market psychology, man and machine are chasing what is hot now. What is not so hot, other than in a circle of people who get their kicks thinking about rocks in the ground and alternative fuel sources, is the stuff that the whole AI infrastructure will be built upon.
Bottom Line
It’s an exciting era, this robotic takeover. As you can see by the note above, nothing I write will ever be AI enhanced, let alone generated. You can’t say that about many information sources out there. Though I think the technology comes with its share of evil (and hype), it’s the situation we’ve got and as market participants we should proceed accordingly, and with common sense.
Semi is going to blow out into a harsh correction. What will be left? A dirty industry digging rocks out of the ground, for one.
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