The semiconductor sector has recorded its worst slump in over a year, with the iShares Semiconductor ETF (SOXX) falling 13.2% over the past four weeks. This decline marks the sharpest four-week drop for the fund since April 2025. Measured from its late-June peak, the drawdown is closer to 15%. The slide follows a period of significant growth, where SOXX gained 102.6% from its February low into the late-June high. Despite the recent losses, the fund remains up 84.6% year-to-date, compared to a 17.1% rise for the Invesco QQQ Trust (QQQ).

Drivers of the Decline

Three primary forces drove the recent reversal in semiconductor stocks. The first is growing uncertainty regarding artificial intelligence capital spending by hyperscalers, which has been the largest source of chip demand for two years. Investors are increasingly questioning the duration of current spending levels. The second factor is rising competition from China, highlighted by memory maker CXMT filing to raise nearly $10 billion in a Shanghai initial public offering, signaling potential supply expansion in the memory market. The third driver is profit-taking after several sector names experienced parabolic gains.

Valuation Metrics

The forward price-to-earnings ratio for SOXX has fallen to 24.7 times, roughly in line with its three-year average and now level with the Nasdaq 100 at 24.0 times. Since late April, semiconductors had traded at a premium to the broader index, peaking above 32 times in late June. That premium has now evaporated. The price-to-earnings-to-growth (PEG) ratio for SOXX sits at 1.26x, the lowest reading since 2016, compared to 1.56x for QQQ. This indicates that semiconductors are expected to grow faster than the broader tech index while costing less per unit of growth.

Micron Technology Performance

Micron Technology Inc. (NASDAQ: MU) is the best-performing holding in SOXX over the past year, up 654% and trading at $904.28 as of the July 14 close. Other top performers include Intel Corp. (349%), ASE Technology Holding Co. Ltd. (299%), Astera Labs Inc. (280%), and Teradyne Inc. (269%). Despite the massive rally, Micron trades at 6.8 times forward earnings, significantly below its long-run average of 16.8 times.

Analyst Sentiment

Analysts remain optimistic about Micron Technology's prospects. Benzinga tracks 100 analyst ratings on the stock, with zero downgrades. Every rating action since June 25 has been a price target increase. The consensus price target stands at $1,316.79, representing 45.6% upside from the July 14 close. The high target is $2,000, while the low is $385. Keybanc lifted its target to $1,750 from $1,600 on July 14, maintaining an Overweight rating. Cantor Fitzgerald, Barclays, DA Davidson, and Susquehanna all carry $2,000 targets. Goldman Sachs raised its target to $1,100 from $900 while maintaining a Neutral rating.

Micron Technology has generated significant shareholder value over the past five years, outperforming the market by 52.5% on an annualized basis. The company delivered an average annual return of 64.36% during this period. Currently, Micron Technology holds a market capitalization of $1.02 trillion.

An investment of $100 made in Micron Technology five years ago would have grown substantially. Based on a current price of $903.76, that initial investment would be worth $1,212.50 today.

Micron Technology’s Performance Over Last 5 Years

The following table illustrates the growth of an initial investment over the specified period:

The performance highlights the impact of compounded returns on cash growth over time.