The Philadelphia Semiconductor Index surged 88% in the second quarter, setting a record for its strongest single quarter performance in history. However, after the carnival, violent fluctuations followed one after another - a weekly increase of 7.3%, followed by a subsequent decline of 7.9%, and a cumulative decline of about 9% since July. Morgan Stanley's Chief Equity Strategist Mike Wilson has issued a clear warning: the momentum of semiconductor prices is approaching historical highs, and the trend is highly similar to silver, which quickly stalled after an outbreak earlier in 2026, with a lag correlation of about four months. In his view, the peak of momentum may be unfolding as scheduled, and a more sustainable market liberalization trend will take over.

Deadly signal for semiconductor profit correction

Over the past week, Nasdaq has experienced a continuous decline of 4.6%, setting a record for the longest consecutive decline of the year, with a drop twice that of the same period in the P&P 500. What makes the bulls even more uneasy is that the weakness in the stock prices of ultra large scale cloud providers is a leading signal that the semiconductor sector's profit correction breadth has reached a historical extreme.

Wilson pointed out that cloud vendors are the core buyers on the demand side of chips, and the marginal changes in their capital expenditure expectations directly determine the profit prospects of chip companies. Meta announced the sale of excess computing power to external clients, which was interpreted by the market as a possible turning point in the growth rate of cloud vendors' capital expenditures, directly triggering a fierce sell-off in chip stocks. Data shows that the combined capital expenditure ceiling of the five major tech giants in 2026 has risen to $725 billion, a 77% increase from 2025. However, the scale of borrowing has also skyrocketed, and the market's patience for realizing returns is running out.

Wide base regression under triple downwind

Wilson's strategic recommendation is clear and direct: reduce exposure to popular momentum and shift towards optional consumer goods, transportation, and regional banks. This judgment is supported by three tailwinds: oil prices continue to decline to around $70 per barrel, tariff inflation hits its peak, weakening expectations of interest rate hikes, and the median stock profit growth rate of the S&P 1500 index has reached double digits - the fastest level since the recovery period of the pandemic, but is generally underestimated by the market. In the past six weeks, these sectors have achieved relative outperformance. Keywords: semiconductor, semiconductor index

Of course, risks also exist: the conservative stance of the Federal Reserve on liquidity supply is hedged against the rising demand for liquidity in the real economy and market, and the trend of cryptocurrencies and momentum stocks has revealed this pressure. But this did not shake Wilson's confidence in the target price of 8300 points for the S&P 500 index - its implementation path depends on broad-based profit recovery, rather than the continued leading position of popular sectors.Editor/Cheng Liting