Semiconductor ETFs, including SOXX and SMH, experienced record inflows in July despite significant price declines, indicating investors are 'buying the dip' in the AI-driven chip sector. This behavior suggests a belief that the underlying fundamentals of the semiconductor supercycle remain strong, despite short-term volatility and differing expert opinions on market direction.
The filing highlights a fascinating divergence: semiconductor ETFs, particularly SOXX and SMH, saw record inflows in July even as their prices experienced their worst monthly declines since 2008. This suggests a strong 'buy the dip' mentality among investors who believe in the long-term AI-driven chip supercycle, despite short-term volatility. While Bank of America analysts view corrections as a 'summer reset' and not a fundamental reversal, citing rising hyperscaler capital spending, others like Ed Yardeni foresee further declines due to factors like forced selling abroad and potential competition from Chinese AI models. For traders, the key question is whether these record inflows represent a smart long-term bet on AI or if investors are catching a falling knife, with potential for further downside if Yardeni's bearish outlook materializes.