Chip index closes below its 200-day average, first time since May 2025

The PHLX Semiconductor Index, the benchmark chip watchers call the SOX, closed below its 200-day moving average on Friday. That's the first time it has done so since May 2025. The line had held for months, which makes Friday's close the end of a long streak rather than a one-day wobble.

The damage runs deeper than one session. According to BTIG, the index now sits roughly 40% below its June 22 peak of 14,634. The slide followed a wave of broad selling, with semiconductor and AI names taking the heaviest hits as investors unwound positions that had been crowded for a long time.

The 200-day moving average averages closing prices across the last 200 trading sessions, smoothing out daily noise. Above it, traders read the long-term trend as healthy. Below it, many read the trend as turning. Funds and traders running trend-following rules often trim or add exposure when a major index crosses that line, which can pour fuel on a move already in motion.

The break lands as investors press a harder question: will the huge sums going into data centers ever earn enough to cover the cost? Big tech has been spending heavily on AI infrastructure, and chipmakers have been among the most direct beneficiaries. If the businesses buying all that hardware can't show strong returns, they may eventually slow the spending.

The SOX has doubled as one of the market's defining AI trades, so weakness there can bleed into wider indexes where chip and AI stocks carry heavy weight. For traders, the 200-day line is now the marker to watch: climbing back above it would point to a false alarm, while repeated failures to reclaim it would harden the case that the trend has flipped.