126%.
That’s how much the Philadelphia Semiconductor Index ($SOX) has returned since last May.
The S&P 500 Index, over that same stretch? A comparatively modest 25%.
I’ve been analyzing markets for a long time, and I’ll tell you straight: a five-to-one performance gap between a single sector and the broader market isn’t normal.
It’s a signal.
And if you’ve been sitting on the sidelines waiting for a reason to pay attention to semiconductors, that number is your reason.
But here’s what really caught my eye.
When you dig into where global corporate profits are actually coming from in 2026, semiconductors don’t just show up near the top of the list.
They account for nearly half of the entire leap in MSCI AC World earnings this year. Not a quarter. Not a third. Nearly half. One sector, driving half the world’s profit growth.
That’s not a trend. That’s a tidal wave. And I want to make sure you’re positioned for it.
$SOX Outperforms the S&P 500
Chips Are Running the Table
Let’s put this in perspective.
The engine behind this move isn’t some speculative bet on future technology. It’s already showing up in the earnings.
When you look at where MSCI AC World corporate profits are actually coming from in 2026, semiconductors and equipment account for nearly half the entire increase in global earnings.
Not a meaningful slice… not a notable contribution… nearly half.
Tech hardware is a distant second. Oil and gas take third. Banks, pharma, retail — all of them combined barely move the needle.
One sector is doing the heavy lifting for the entire global economy right now, and that sector is chips.
It’s obvious why when you think about what’s driving this trend…
Every data center being built to run AI workloads needs semiconductors. Every advanced manufacturing facility coming online needs them. Every smartphone, every electric vehicle, every piece of defense hardware rolling off an assembly line needs them.
Demand isn’t coming — it’s here, it’s compounding, and it’s finally hitting income statements in a way that can’t be ignored.
Still, the rally hasn’t been a straight line.
The index peaked near 140% earlier this month before pulling back to 126% today.
That consolidation is actually the most important part of this story — because it’s created a gap between where the sector has been and where the individual stocks within it are rated right now.
And that gap is exactly where opportunity lives…
What the Green Zone Ratings Are Telling Us
When a sector runs this hard this fast, most investors do one of two things. They chase it blindly, or they dismiss it as too extended to touch.
Adam’s Green Zone Power Ratings system exists precisely to cut through that kind of noise — and what it’s showing me right now is more nuanced than either of those reactions.
$SOX Earns “Neutral” Rating
Despite that jaw-dropping price performance, the $SOX composite is sitting right at 44 on the Green Zone Power Ratings gauge — essentially neutral territory.
The needle hasn’t yet crossed into bullish territory. That might seem contradictory at first. How does an index that’s up 126% still read neutral?
The gauge isn’t scoring the past. It’s scoring the present setup. The recent pullback from peak levels, combined with lingering uncertainty around trade policy and global demand, is keeping the overall reading from turning green.
We’re at an inflection point, not a done deal.
But within the index, the individual constituent ratings tell a more actionable story.
The top-rated name in $SOX right now is Micron Technology (MU), solidly in bullish territory. Micron has been one of the clearest beneficiaries of the AI memory buildout, and its rating reflects both the fundamental momentum and the price action behind it.
Nova Ltd. (NVMI) is also firmly bullish. ASML Holding (ASML), KLA Corp. (KLAC) and Lam Research (LRCX) cluster with respectable scores, suggesting strength without being stretched.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) rounds out the top six, which is notable given everything the geopolitical noise machine has thrown at that stock this year.
This breakdown tells me the semiconductor sector isn’t a monolith right now.
The overall index reads neutral, but the best-rated names within it are still flashing buy signals.
That’s the ideal setup — broad sector skepticism combined with select names bucking the trend.
I’ll be watching closely to see whether the $SOX gauge crosses into bullish territory in the weeks ahead.
If it does, that would be a powerful confirmation signal that this rally has a second leg.
Until next time…
Safe trading,
Matt Clark, CMSA®
Chief Research Analyst, Money & Markets
P.S. Many investors treat the “Magnificent Seven” like the only way to play tech. But this next stretch of the market may be more selective.
In fact, some of the strongest setups we’re seeing right now are in lesser-known tech names tied to AI infrastructure, semiconductors, cybersecurity and enterprise software.
That’s exactly why Infinite Momentum Alert chief investment strategist Adam O’Dell is going LIVE tomorrow at 1 p.m. to break down where you can uncover the best opportunities to capitalize on this environment. Learn more here…