The iShares Semiconductor ETF (NASDAQ:SOXX) finds itself at a crossroads. JPMorgan’s latest technical update reveals that the Philadelphia Semiconductor Index, a benchmark for the iShares Semiconductor ETF, has largely been propelled to the upper limit of a multimonth trading range by a rally in AI-related stocks.
Yet the index now faces stiff resistance near 5,400, raising questions about its ability to sustain a long-term rally without support from the more cyclical analog semiconductor group.
JPMorgan said the analog segment is not performing up to par and this is consistent with with the PMI level globally being around 50, indicating a certain level of pessimism. SOXX would need participation from this segment to break out of its trading range and sustain a broader rally.
“We also highlight just how correlated the analog group is to the global manufacturing cycle, with the current pricing roughly in line with a 50 global manufacturing PMI reading. That coincides with the US exceptionalism theme that seems priced across markets in other asset classes,” JPMorgan analysts said in a note.
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