What Happens to Emerging Markets (EEM) When Semiconductors Rally Sharply?
What happens when semiconductors (SMH) sharply outperform? AI investment cycle, global economic implications, and tech leadership signals.
How Emerging Markets (EEM) Responds
Scenario Background
Semiconductor stocks (SMH) are highly cyclical and serve as a leading indicator for both the technology cycle and broader industrial economy. Semiconductor end-markets include computing, smartphones, automotive, industrial, and increasingly AI infrastructure. Strong semi performance typically signals robust capital expenditure cycles, inventory restocking, or technology platform shifts.
Read full scenario analysis →Historical Context
SMH has had multiple sustained outperformance periods: 1999 (tech bubble leadership), 2017 (crypto GPU cycle), 2019-2020 (COVID tech acceleration), and 2023-2024 (AI boom). The 2023-2024 cycle saw Nvidia singularly drive much of the rally, with SMH rising 200%+ from October 2022 lows. Prior cycles saw broader chip leadership. The 1999 cycle preceded significant tech drawdowns; 2017 and 2019 preceded milder corrections.
What to Watch For
- •SMH/QQQ ratio at multi-year highs
- •Semi capex announcements (TSMC, Samsung, Intel)
- •Memory pricing bottoming and rising
- •AI infrastructure deployment accelerating
- •Traditional semi end-markets (autos, industrial) recovering
Other Assets When Semiconductors Rally Sharply
Other Scenarios Affecting Emerging Markets (EEM)
Get scenario analysis and Emerging Markets (EEM) alerts delivered to your inbox.