Jim Cramer Calls the Chip Trade Broken, but Semiconductors Are Still Up 62% in 2026
Jim Cramer noted a shift in AI leadership from chips to software, citing the VanEck Semiconductor ETF (SMH) down 11.1% and iShares Software ETF (IGV) up 22.4% since June 30. Longer-term, chips still lead with a 61.9% gain since 2025. Micron (MU), SanDisk (SNDK), and Bloom Energy (BE) fell due to hedge fund liquidation, despite strong guidance. Microsoft (MSFT) supports chip demand with $115.95B in capex.
How this was made
The 30-second read
Why it matters
The commentary provides a qualitative view of sector rotation but offers no new quantitative data beyond already‑public price changes.
Market read
The piece frames a potential short‑term rotation between software and chip stocks, useful for sector‑themed traders but lacking fresh actionable data.
What to watch
Supply‑chain constraints, emerging Chinese competitors, and macro‑policy shifts could amplify chip volatility beyond the fund‑liquidation narrative.
Background
Jim Cramer discussed the AI trade shift on Mad Money, comparing performance of a semiconductor ETF (SMH) and a software ETF (IGV) and citing recent price moves of key chip and software stocks.
Ticker impact
Microsoft rose 45.4% from June 30 to Oct 12, supporting Cramer's software‑first narrative.
likely upward pressure as investors chase the momentum.
Recent price surge and high capex guidance suggest continued demand.
Micron fell 14.3% from June 30 to Oct 12 after a hedge‑fund sell‑off and a report on Chinese rival CXMT.
potential pressure as profit‑taking continues.
Price drop linked to fund liquidation and competitive news.
SanDisk pulled back 34.6% over the same period, cited as a victim of the hedge‑fund unwind.
likely further downside unless broader chip rally lifts it.
Large sell‑off magnitude and lack of fresh catalyst.
Bloom Energy fell 13.35% after the hedge‑fund collapse and amid a new Chinese competitor report.
downward pressure expected in the near term.
Price move tied to fund liquidation and sector competition.
Market effects
Highlights the volatility of AI‑related chip stocks versus software, suggesting a possible rotation risk for sector‑focused funds.
U.S. tech‑heavy indices may see mixed effects as software leads while chip names lag.
The narrative could influence global AI‑related equity sentiment, especially in markets with heavy semiconductor exposure.
Counterpoint
If Microsoft’s capex slows or Azure growth misses, the chip rally could regain momentum, reversing the software‑first thesis.
Key entities
- personJim Cramer
Host of Mad Money, providing the trade narrative.
- fundVanEck Semiconductor ETF
ETF tracking semiconductor companies, used as a benchmark.
- fundiShares Expanded Tech-Software Sector ETF
ETF tracking software companies, used as a benchmark.
