SOXX ETF Tumbles to $471 on AI Bubble Worries, Investor Outflows

The iShares Semiconductor ETF (SOXX) has fallen into a bear market, dropping from June's record $656 to $471, its lowest since July. The decline comes as concerns about an artificial intelligence (AI) bubble weigh on semiconductor stocks. On Friday, investors withdrew $1.54 billion from SOXX, leaving assets under management at $48 billion. AI-related fears have prompted investors to sell SOXX shares. The fund tracks the largest semiconductor companies, most of which have seen share price declines. Advanced Micro Devices, SOXX's largest holding, is down 23.20% from its peak this year. Nvidia has fallen 16% from its peak. Micron, Broadcom, and Intel have each entered a technical bear market. Investors are questioning whether the AI industry's growth can continue and fear a bubble among the largest in history. Ray Dalio, Michael Burry, and Ken Griffin have warned that rising interest rates and bond yields could cause the bubble to burst. Those concerns have intensified over the past few weeks. OpenAI is said to have secured only $11 billion against a $30 billion fundraising target. It also cut its target valuation to $1.25 trillion from $1.4 trillion. Shares of neocloud companies CoreWeave, Nebius, Riot Platforms, and IREN have also plunged. Elon Musk has warned that more than 200 neocloud companies will fail as funding becomes unavailable. These developments will affect the semiconductor companies held by SOXX. On the weekly chart, SOXX shows a strong rally over the past few months, followed by a retreat from June's $656 record to $471.5. The ETF has fallen below its 50-week moving average and breached the 23.6% Fibonacci retracement level. The Supertrend indicator has turned red for the first time in more than a year. These technical signals suggest SOXX will likely decline further, potentially reaching $400, a support level corresponding to the 50% Fibonacci retracement.