The Milestone

The Philadelphia Semiconductor Index just posted its strongest one-year performance since the year 2000. Analysts have called this "unprecedented." Several outlets have called it "a milestone."

The word "since" is doing a lot of work in those sentences.

In March 2000, the semiconductor index reached a comparable level. It then fell 82% over the following 26 months. This information is technically included in the phrase "strongest since 2000." You just have to know what happened in 2000. (If you do not know what happened in 2000, the phrase "since 2000" reads as good news. Many people appear to be reading it this way.)

Currently, retail investors are pouring $7.5 billion per day into US equity ETFs. This is a record. It is up 153% from March. Hedge funds, separately, posted their largest reduction in US technology exposure since July 2024 last week. This marks the third-largest weekly exit from tech on record.

These two groups of people are looking at the same market. They have reached different conclusions. One group has published their conclusions as "unprecedented milestone." The other group has not published theirs.

Intel is trading at approximately 100 times forward earnings. One analyst described this as "pricing in absolute perfection for years to come." The analyst who wrote similar language in 1999 updated his target in 2001. The update went in the other direction.

The sector trades at 26.6 times forward earnings, versus 20.7 for the broader S&P 500. The difference is described, by people in the sector, as reflecting the sector's growth trajectory. (The word "trajectory" means the line goes up. It is a word about the direction of travel, not the distance to the destination.)

Global semiconductor sales are projected to reach $975 billion in 2026, driven by demand for AI infrastructure. This would be a record. The previous records were set by companies whose forward PE ratios were later described differently.

Analysts have noted this rally "surpasses even the recovery from the COVID crash." This is accurate. The COVID crash and the 2000 dot-com collapse were different events. Surpassing the recovery from one of them says nothing about the other. This nuance is present in the data. It is less present in the headline.

The semiconductor sector is calling this a milestone. The record books, consulted directly, confirm this is accurate.