The US stock domain is currently brimming with new developments. The ongoing AI boom has led the S&P 500 to record some major highs at the moment, with companies like Nvidia, Amazon, and Meta leading the AI race. That being said, there’s another rising domain that is set to break records soon, backing the AI sector steadily. Semiconductor stocks are now another lucrative way for investors to explore new gains. Here’s how.

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Semiconductor Stocks Are On The Rise

AI-backed companies have now delivered a new use case to semiconductor and chip companies. Semiconductors are essential to power the AI sector, which is now giving this domain a new value point to bank on. Per the latest post by the Kobeissi Letter, the semiconductor index $SOX has been rallying for 14 months straight, as investors have now started to identify the importance of semiconductors in the current economic momentum.

“Current momentum in US semiconductor stocks is historic. The Semiconductor Index, $SOX, has rallied for 14 consecutive trading sessions, the 2nd-longest streak in history. The index is on track to exceed its record 15-day stretch set in 2014.”

The KL post outlines how SOX is now on the verge of exceeding its 15-day rally stretch and has gained 34.4% in its current rally stretch. The portal later added that this has led the semiconductor index to surge 1.43% higher than the S & P 500 index, displaying its current popularity levels.

“During the current streak, $SOX has gained +34.4%, the strongest 14-day run since 2002. As a result, the semiconductor index relative to the S&P 500 is up to 1.35, an all-time high. The ratio is now 42% above the 2000 Dot-Com Bubble peak of 0.95. Semiconductor stocks are on fire.”

Hedge Funds Are Exploring Semiconductors As Well

In another notable development, major hedge funds have now pivoted their attention towards semiconductors as well. Per another post by the Kobeissi Letter, hedge funds are purchasing global tech stocks, buying stakes in sectors like semiconductors and electronics.

“Hedge funds are aggressively buying tech stocks. Hedge funds purchased global technology stocks more than any other sector last week. Information technology names were purchased for the first time in 5 weeks, led by semiconductors, electronic equipment, and software. At the same time, purchases of communication services were the largest in 5 months. This was primarily driven by new long positions rather than short covering, signaling genuine institutional demand rather than forced repositioning. As a result, hedge fund gross and net exposure to global tech rose to 28.3% and 34.0%, both the highest in 5 years.“

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