Chip ETF's Brutal July Leaves a Fractured Market — and a Data-Packed Week Ahead

Chip stocks recover on hyperscaler earnings, but memory and equipment makers show mixed signals.

The iShares MSCI Global Semiconductors UCITS ETF closed Friday at €16.27, up a modest 0.27 percent. It was the kind of gain that barely registers as a pulse — yet for a fund that just endured its worst month since December 2002, even a flat close counts as progress.

July was merciless. The ETF shed 22.1 percent over the month, with memory-chip heavyweight Micron suffering an even steeper 28.7 percent slide. The catalyst was a broad rotation out of AI-linked trades, amplified by forced selling from leveraged funds. The hedge fund Situational Awareness, run by Leopold Aschenbrenner, lost 67 percent in July and was forced to sell its portfolio to Citadel — a stark illustration of how margin calls can turn a sector correction into a cascade.

Hyperscalers Throw a Lifeline

The turning point came in the final days of the month. Amazon and Microsoft delivered cloud results that reignited confidence in the AI infrastructure story, and the Philadelphia Semiconductor Index jumped 7.5 percent on July 30. Amazon shares surged 15 percent to $271.58 — their biggest single-day gain since April 2012 — powered by AWS growth of 37 percent. Microsoft added 21.8 percent within a week.

The ripple effects crossed oceans. Samsung climbed 26.8 percent to 262,500 won, while SK Hynix advanced 30 percent to 1.72 million won. In Europe, Infineon rose 9 percent on Thursday and another 3.64 percent on Friday to €62.08, though the stock still sits roughly 31 percent below its 52-week high of €89.67. The German chipmaker reports its own quarterly numbers on Wednesday.

Equipment Makers Steal the Show

One corner of the sector has been quietly outperforming: semiconductor equipment manufacturers. Lam Research posted record revenue and beat earnings expectations with $2.35 billion in sales, and the effect rippled across the group. Applied Materials jumped around 15 percent on Thursday and held those gains into Friday, despite trading about 30 percent below its June high of €21.52. The company reports its own results on August 13, and analysts see a catch-up opportunity for the equipment segment, with ASML and Applied Materials drawing particular attention.

The underlying message: demand for chip manufacturing capacity remains robust, driven by the same AI infrastructure buildout that fueled the sector's rally.

Memory Signals Point Both Ways

The memory segment offers a more complicated picture. Micron delivered record revenue of $41.46 billion for its third quarter of 2026, well above the $35.84 billion consensus, with earnings per share of $25.11 versus expectations of $20.28. The stock still fell 10.6 percent for the week — evidence that investors remain jittery about valuations even when operations deliver.

Yet early August data from South Korea tells a different story. Exports of High Bandwidth Memory and DRAM surged 179 percent year-over-year, suggesting pricing power at SK Hynix and Samsung remains intact despite recent profit-taking. Silicon Motion added to the positive tape with 127 percent year-over-year revenue growth.

AMD's Moment of Truth

All eyes now turn to Tuesday, August 4, when AMD reports second-quarter results. Analysts expect earnings of $1.61 per share on revenue of roughly $11.3 billion — a dramatic jump from the $0.48 per share the company earned in the year-ago quarter. The critical question is whether the data center and AI businesses can justify those expectations.

A cautionary tale comes from Arm Holdings, which beat earnings estimates recently yet saw its stock fall on concerns about a weak smartphone business. The market is signaling that beating expectations alone is no longer sufficient.

Sandisk follows on Wednesday, with its own quarterly report. The following day brings Infineon's numbers, and Friday closes the week with the US jobs report. The ISM manufacturing index lands on Monday, adding macro data to the mix. Stronger-than-expected economic figures would support the thesis that tech giants will sustain their AI spending.

A Technical No-Man's Land

The ETF's chart reflects the uncertainty. The 14-day RSI sits at 41.6 — approaching oversold territory without quite reaching it. The fund trades 12.35 percent below its 50-day moving average, a clear sign of short-term pressure. The distance to the June 22 peak of €21.52 stands at 24.39 percent.

The longer-term picture, however, remains intact. The ETF trades 24.83 percent above its 200-day average, with a year-to-date gain of 70.30 percent and a 12-month advance of 125.87 percent. The July correction has left scars but hasn't broken the structural uptrend.

HSBC analysts have flagged a 37 percent probability that cloud providers overshoot their capital expenditure this year — a reminder that the debate over AI investment sustainability is far from settled. With AMD, Sandisk, Infineon and the jobs report all landing within five trading days, the market will get plenty of data to chew on. Whether the rebound has legs or the sell-off resumes may well depend on what those numbers reveal.