AI Chips Hit a 15-Year Discount as Silicon’s $1 Trillion Punchline Takes Shape

AI chip stocks are trading at their cheapest valuation since 2011, with the Philadelphia Semiconductor Index (SOX) near 10 times two-year forward earnings and at a 22% discount to the broader S&P 500 based on expected earnings, according to Bank of America.

The discount depends on continued AI spending. If major technology companies cut planned AI investments for 2027 by 20%, chipmaker profits could fall sharply and leave the stocks looking more expensive than their current multiples suggest. AI chip stocks have declined 38% since June amid fears of slowing AI infrastructure spending, including a 12.2% drop in the SOX on Nov. 5 during Wall Street’s crash, its worst session since March 2020.

Nvidia (NVDA) closed Monday at $178.67, 26% below its 52-week high, entering bear territory. The company is also dealing with leadership scrutiny after CEO Jensen Huang acknowledged an affair with a former Megaspeed executive whom US authorities reportedly identified as a Chinese intelligence asset, a claim Beijing denies. Nvidia’s board opened an independent investigation on Nov. 8 while backing Huang, and a Nov. 11 congressional deadline arrives before the company reports earnings on Nov. 17.

The SOX rebounded nearly 11% across two trading sessions and closed Monday at 10,033.93. A close above 10,100 would strengthen the recovery, with 10,700 and 10,869 as subsequent levels where selling pressure could return; a failure to hold 9,976 could put 9,000 back in focus, followed by a potential decline toward 8,704.

Momentum has improved without fully reversing the broader downtrend. The Relative Strength Index (RSI) recovered to around 40 after entering oversold territory on November 5, indicating that selling pressure is easing while buyers have yet to take control.