These days, the same three letters are thrown around like a lucky coin in practically every retail brokerage chat room. VanEck Semiconductor ETF, or SMH. A fund that has gained about 136% in the last year and nearly 58% in 2026 alone as of Thursday’s close at $567.88. During manias, those numbers were associated with individual stocks rather than diversified baskets. And yet here it is, sitting on a 52-week range from $234 to $581, the kind of arc that compels you to take a second look.
Speaking with vendors on the floors and message boards gives the impression that no one is quite sure whether to rejoice or get ready. The fund tracks the top 25 U.S.-listed semiconductor companies, including Nvidia, Broadcom, Taiwan Semiconductor, and the typical group. All of these companies have been drawn together by the same gravitational pull: artificial intelligence, hyperscaler spending, and the unwavering conviction that chips are the new oil. Perhaps they are. Perhaps they were always. However, even optimists are beginning to recoil from the speed of the move.
The technical desk at Bank of America was the first to notice it, or at least to voice it loudly. For the fifth time since 2012, SMH’s 14-week relative strength index has closed above 80 for two consecutive weeks, according to their analyst Paul Ciana. The fund is currently at its most stretched point ever, trading roughly 150% above its 200-week moving average. Prior peaks peaked between 100 and 108%. It’s the type of statistic that goes unnoticed under “today’s news” but ages uncomfortably well.
In 1995, 1997, 2000, 2012, 2014, 2017, and 2024, Ciana examined seven previous instances in which the semifinals were this hot. The pattern is nearly unremarkable in its regularity. The demonstration continues. It then reaches the top. Then it shatters. During those episodes, the average peak-to-trough drawdown was 44%. It was 85% in the 2000 episode that no one wants to bring up at dinner parties. In 2012, even the mildest correction resulted in an 18% reduction. This time might be different. It’s also possible that the fact that we are inside it makes it feel different.
The trucks carrying Xeon 6 processors are still visible outside Intel’s packaging plant in Chandler, Arizona. For the first time since the dot-com bubble, Intel, which has been written off for dead more times than anyone can remember, momentarily surpassed $400 billion in market capitalization last month. With it, AMD ran. Call options outnumber puts are almost two to one for memory names like Micron and Sandisk. Even when the headline numbers remain courteous, it’s difficult to ignore how giddy the tape feels.
What’s odd is that Nvidia is currently the group’s quieter cousin, which is why seasoned traders keep coming back to this point. In actuality, its implied volatility is lower than that of the SMH ETF that surrounds it. The stock is currently a few dollars below its peak in October. “Long global semiconductors” were found to be the most crowded trade on Wall Street, with a record 73%, according to Bank of America’s May Global Fund Manager Survey. Finding the marginal buyer becomes more difficult when everyone has entered the market.
This does not indicate that the rally has ended. The capital expenditures and earnings are real, and there are no clear indications that the development of AI infrastructure will cease. Similar skepticism was present for both Tesla and Apple in the mid-2000s. However, there’s a sense that the simple portion of this trade is over, leaving only the more difficult and emotional middle stretch, where conviction is put to the test by unexpected pullbacks and sideways tape. According to one CNBC analyst, the “runaway train” is still in motion. Just whether anyone is still at the station to purchase a ticket is the question.
