Tech’s ‘New Normal’ Trade Pair: Long Chip Stock, Short Software

The article describes a widening bifurcation in tech: semiconductor stocks have surged (driven by AI-driven data‑centre demand) while software shares have lagged, prompting a trade of long chips, short software. ETF SMH has climbed sharply since 2023 and this year, while software ETFs like IGV are down and at multi‑quarter lows. Strong earnings and upbeat guidance from chip names (and revised 2027 estimates) have reinforced the rotation, but some technicians warn the SOX’s rapid run and above‑average valuation could make semiconductors vulnerable to a pullback. Market impact: investors are reallocating into semis, pressuring software, and amplifying relative performance trends across indices and stocks.