Last time the U.S. semiconductor sector rose 50% in 25 days, the internet bubble burst. Will history repeat itself now?

```

U.S. semiconductor stocks are experiencing an extreme rally, with their 25-day rolling gains rising to the highest level in more than a quarter of a century—the last time there was such a rapid surge was on the eve of the collapse of the internet bubble.

According to Dow Jones market data, the Philadelphia Semiconductor Index (SOX) recorded its strongest 25-day rolling performance since March 9, 2000, on Tuesday, with cumulative gains exceeding 50%. For those who experienced the internet bubble firsthand, this date is significant: On the day after March 9, 2000, the Nasdaq Composite reached its closing high during the internet bubble era, then lost about 80% of its market capitalization over the next three years, taking 15 years to fully recover.

The breadth of this rally has significantly expanded. In the past 25 trading days, all SOX index components have risen by more than 14%, with Intel, Credo Technology, and Astera Labs each advancing by more than 100%. Meanwhile, Michael Burry—the investor known for shorting assets linked to the 2008 financial crisis as highlighted in "The Big Short" book and movie—disclosed this week that he had purchased additional put options tracking the SOX index via the iShares Semiconductor ETF (SOXX), with contracts expiring in January 2027.

The boom in demand driven by artificial intelligence provides fundamental support for this surge, but the extreme short-term gains and the public warnings from some market veterans have made overheated risks within the sector the focal point of current investor debate.

Historical Mirror: Gains Reach Levels Seen Before the Internet Bubble Burst

Dow Jones market data shows SOX’s 25-day rolling gains on Tuesday exceeded 50%, the highest since March 9, 2000. This data point has clear historical context: the day after March 9, 2000—March 10—the Nasdaq Composite reached its peak closing point during the internet bubble era.

The subsequent crash lasted three years, with Nasdaq losing about 80% of its market value; it took up to 15 years to fully recover from its historic bottom to the bubble’s peak.

The early stage of this semiconductor bull market was largely driven by Nvidia’s strong performance in a single stock, but recently the rally has spread across the sector, with previously underperforming stocks like Intel and Qualcomm surging sharply.

Dow Jones market data shows that over the past 25 trading days, all SOX index components have risen by more than 14%, with Intel, Credo Technology, and Astera Labs each up more than 100%, leading the sector.

On the fundamental side, booming demand for key components such as memory chips for AI infrastructure has caused supply bottlenecks, prompting Wall Street analysts to sharply raise profit forecasts for semiconductor companies, covering not only high-end GPUs needed for top-tier AI model training, but also various chip design and manufacturing firms. The strong performance from semiconductor firms in Q1 this year has further strengthened investors' optimistic expectations for the sector.

Warning Voices: Veterans Issue Alerts, Burry Positions with Put Options

Not all market participants are optimistic about the sustainability of this rally.

Several Wall Street veterans, including former JPMorgan chief strategist Marko Kolanovic, have publicly warned that the rally in chip stocks and broader AI-related shares appears severely overstretched.

Michael Burry—whose investment bets before and after the 2008 financial crisis were widely chronicled in "The Big Short" book and film—disclosed earlier this week in comments to his Substack subscribers that he had purchased more put option contracts tracking the SOX index via the iShares Semiconductor ETF (SOXX). Burry said these contracts will expire in January 2027.

Risk Disclaimer and ExclusionsThe market involves risks; invest with caution. This article does not constitute personal investment advice, nor does it consider individual users' specific investment objectives, financial circumstances, or needs. Users should assess whether any opinions, views, or conclusions in this article are suitable for their own situation. Invest accordingly, and bear responsibility for your own decisions. ```