Micron's 30% Decline Is Dragging Down the iShares Semiconductor ETF (NASDAQ: SOXX). Here's a Low-Cost Vanguard ETF to Buy Instead.

The setup is less about semiconductors losing secular relevance and more about a crowded ownership problem. When an ETF’s return is dominated by a handful of extended names, the first-order move is often a factor unwind rather than a fundamental collapse, which makes the next leg more sensitive to positioning and earnings revisions than to headline AI demand. In that regime, a broader tech basket with mega-cap ballast should see lower drawdowns because software/platform cash flows can offset cyclical hardware beta.

The second-order risk is memory normalization. If HBM/DRAM supply catches up even modestly over the next 2-4 quarters, the margin expansion story at MU is the first to slow, and that usually ripples outward to equipment names with a lag as customers digest capex after the scarcity premium fades. That argues for a transition from "picks and shovels" scarcity trades to cash-flow compounders in the AI buyer layer over a 6-18 month horizon.

Contrarian view: the market may be overpaying for the producers of AI infrastructure while underpricing the beneficiaries of AI deployment. If model adoption keeps driving enterprise spend, MSFT/GOOGL and even AAPL can compound on operating leverage while hardware multiples compress, making a diversified tech fund a cleaner exposure than a pure semiconductor basket. The thesis is falsified if MU continues to post sequential upside in pricing/bit shipments through the next two earnings cycles, because that would imply the supply overhang is still distant.