Chips and dips

Chip stocks have been partying like it’s 1999 lately. That might be a bad sign for investors.

Yesterday, Qualcomm notched its fifth straight gain, soaring 41% in its best five-day stretch since 2019. Meanwhile, Intel and AMD also hit record highs after surging 93.35% and 89.95%, respectively, over the past month.

But today, the trade started to overheat: Qualcomm tumbled 11.46%, Intel fell 6.82%, and AMD lost 2.29% as investors took profits after one of the market’s hottest runs in recent memory. The selloff arrives at a time when many on Wall Street are worried that the AI-fueled chip frenzy is beginning to resemble another period of runaway tech enthusiasm: the late 1990s dot-com bubble.

Bubble trouble?

There are some obvious causes for concern. The market is looking extremely concentrated right now, with a tiny group of stocks doing most of the heavy lifting: While the S&P 500 keeps hitting record highs, fewer than 60% of stocks are meaningfully participating—a setup last seen during the late stages of the dot-com boom, according to Bespoke Investment Group.

That’s led some high-profile bears to sound the alarm. Michael Burry recently urged investors to reduce exposure to tech stocks, comparing the recent rise in the Philadelphia Semiconductor Index—which has climbed 63% in 2026—to the run-up that preceded the collapse of tech stocks in 2000.

Still, bulls argue today’s environment looks far less speculative than the dot-com era. The Nasdaq has doubled over the past three years, which is impressive, but still well below the late 1990s surge when it tripled in just 18 months. Consumer confidence is also far weaker today, and IPO speculation remains nowhere near dot-com-mania levels.

The investor playbook

It’s important for investors to understand how exposed portfolios have become to the AI trade. Semiconductor stocks now make up roughly 18% of the S&P 500, while more than half the index is tied to AI in some form. If you believe the rally still has room to run, that’s great news—there’s no sign of the AI boom running out of gas just yet. But if you’re worried about putting all of your eggs into the AI basket, it might be time to diversify.

As for the chipmakers leading the charge, analysts at Deutsche Bank reiterated a Hold rating on Intel this week, arguing the stock’s recent rally already reflects much of the optimism surrounding its foundry business. Analysts at KeyBanc Capital Markets also noted that notebook computer shipments fell 27% in April from the prior month, a potentially negative signal for PC-exposed chip companies like Intel and AMD.

Whether you’re a bull or bear, when every portfolio starts looking like an AI ETF, holding a little extra cash suddenly doesn’t look so boring.—SY