SOX Closes Below 200-Day Average for First Time Since May 2025

The PHLX Semiconductor Index (SOX) ended Friday beneath its 200-day average, marking its first close below that level since May 2025. The break comes as investors assess whether data center spending will yield returns sufficient to justify the buildout.

SOX remains about 40% below the peak it reached June 22, after chip and AI stocks sold off broadly. The 200-day moving average summarizes the index’s average level over a rolling 200-session period. SOX tracks semiconductor companies, so its decline reflects chip shares and does not measure every stock linked to AI.

Historical comparisons since 1995 show an average decline of 0.8% over the five sessions after similar breaks. Average returns were positive in later windows: 4.25% after 10 sessions, 3.09% after 20, 2.95% after 30 and 0.77% after 40.

Those averages describe the size of moves, while the 44% figure shows how often comparable cases ended higher at the 50-session point. Across the measured periods, the average return was negative 0.32%, while the median was a 2.47% decline.

Jonathan Krinsky, BTIG’s chief market technician, wrote in a Sunday note that similar breaks have sometimes produced sharp rebounds, but called the outcome “essentially a coin-toss.” Krinsky also said investors who bought semiconductor shares from May through October are underwater. He described their positions as “six months of overhead supply” that is “unlikely to be overcome anytime soon.”

Long-term chip commitments can leave customers exposed if demand weakens. Nvidia has committed more than $250 billion to secure chips and related components through January 2029. Micron has secured $32 billion of business through 2030 under contracts requiring customers to pay even if they do not take delivery.