Micron Technology Inc., Intel Corp., Advanced Micro Devices Inc., and other chip stocks fell 3% to 9% Wednesday morning. The declines occurred on the first day of the second half of 2026, as BofA's Bubble Risk Indicator flashed a warning for U.S. tech and semiconductor stocks. The VanEck Semiconductor ETF, which rose nearly 76% in the first six months of 2026, was down nearly 5% at the time of writing, while the iShares Semiconductor ETF, which gained nearly 108% during this period, was down over 5%. According to a Reuters report, the Bubble Risk Indicator is currently at 0.91 for the PHLX Semiconductor Sector, 0.82 for the Technology Select Sector, and 0.69 for the Nasdaq 100 index, with scores closer to 1 representing extreme risk and bubble-like price action. The tech-heavy Nasdaq 100 was down more than 1% at the time of writing.
BofA Bubble Risk Indicator Reaches 0.91 for Semiconductor Sector
BofA's Bubble Risk Indicator scores assets on a scale of 0 to 1, with 0 representing no risk and 1 representing extreme risk and bubble-like price action. The indicator is currently at 0.91 for the PHLX Semiconductor Sector and 0.82 for the Technology Select Sector, according to a Reuters report. The indicator is at 0.69 for the Nasdaq 100 index.
BlackRock Investment Institute Flags Unresolved AI Bubble Question
The BlackRock Investment Institute flagged that the AI bubble question remains unanswered, even though the firm remained bullish on the potential of AI to deliver a permanent growth breakout thanks to accelerating innovation. "Three questions remain unresolved: is AI becoming a bubble, how costly will it be, and who will capture the value? We stay overweight U.S. equities and focus on bottleneck opportunities to participate in AI growth without picking model winners: power, grids, memory, chips and data centers," the firm stated in its note.
BII added that physical AI, which includes robots, autonomous systems, and manufacturing, is the next frontier. "Yet the route to abundance, if we get there, runs through scarcity. A similar tension is playing out across other investment themes --- and reshaping portfolios," BII said.
Kevin Warsh Expects US To Be Major AI Beneficiary
Federal Reserve Chair Kevin Warsh said he expects the U.S. to be one of the biggest beneficiaries of the AI boom over the medium term, citing the rapid pace of improvements in AI models. During an interview at the ECB Forum on Central Banking in Sintra, Portugal, Warsh said the U.S. welcomes productivity-driven economic growth and does not view AI as a zero-sum competition. He added that broad-based global economic growth would ultimately benefit the country and make work more productive.
At the same time, Warsh described AI as a fundamental shift for both the economy and monetary policy, saying the Federal Reserve will closely monitor how the technology affects inflation and employment as it pursues its dual mandate of price stability and maximum employment.
The Invesco QQQ Trust is up 19% over the past 12 months, while the iShares U.S. Technology ETF is up 24%.
FAQ
What did BofA's Bubble Risk Indicator show for semiconductor stocks?
BofA's Bubble Risk Indicator is currently at 0.91 for the PHLX Semiconductor Sector and 0.82 for the Technology Select Sector, according to a Reuters report. The indicator scores assets on a scale of 0 to 1, with 1 representing extreme risk and bubble-like price action.
Why did chip stocks fall on Wednesday morning?
Chip stocks fell between 3% and 9% in Wednesday morning trade on the first day of the second half of 2026, as BofA's Bubble Risk Indicator flashed a warning for U.S. tech and semiconductor stocks. The VanEck Semiconductor ETF was down nearly 5% at the time of writing, while the iShares Semiconductor ETF was down over 5%.
What did Federal Reserve Chair Kevin Warsh say about AI and the US economy?
Federal Reserve Chair Kevin Warsh said he expects the U.S. to be one of the biggest beneficiaries of the AI boom over the medium term, citing the rapid pace of improvements in AI models. During an interview at the ECB Forum on Central Banking in Sintra, Portugal, Warsh described AI as a fundamental shift for both the economy and monetary policy and said the Federal Reserve will closely monitor how the technology affects inflation and employment.
