Semiconductors are officially the biggest industry in the S&P 500. Remember when banks and telecom had that title? Exactly.
Semiconductors just became the largest industry in the S&P 500. That has never happened before.
Chips surged 88% last quarter on the back of the AI buildout, with memory makers leading the charge (as measured by the PHLX Semiconductor Index). But here's the catch: while the index looked strong, the average S&P 500 company gained just 11%, and nearly a third of them finished in the red. Leadership has rarely been this narrow.
History offers a reminder worth pausing on. Past market leaders reflected their era, from drug makers to telecom to banks. Today's leader is different in one key way. Semiconductors have always been deeply cyclical. Memory prices have fallen more than 50% in a single year on multiple occasions once supply catches up to demand.
AI is real, and the opportunity is real. But the areas with the highest expectations are often the hardest to keep impressing. The old commodity saying still holds: the cure for high prices is high prices.
Diversification isn't exciting, but it's how you stay in the game through cycles like this.
(Source: Manning & Napier Minute July 7, 2026)
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risks including possible loss of principal.
The PHLX Semiconductor Sector IndexTM (SOXTM) is a modified market capitalization-weighted index composed of companies primarily involved in the design, distribution, manufacture, and sale of semiconductors.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.