Semiconductors Eye a Comeback: Can SMH Lead Q4 Earnings Season?

Bears had a loaded gun and flinched. Hot CPI, rate hikes, war escalation, seasonal weakness, and a 10-year Treasury yield that briefly kissed 5.01% midweek, and yet the S&P 500 bounced 1.14% on September 17 and the NASDAQ added another 0.39% on September 18. The ChartGuys flagged exactly this setup on YouTube, calling it a "bullish weekly higher low thesis" and pointing to semiconductors as the sector attempting to reclaim leadership. Retail traders on X are listening.

The names getting the most buzz are familiar: $SMH (the VanEck Semiconductor ETF), $MU, $AMD, and $TSM. ChartGuys specifically called out monthly higher lows forming across the group, which in chart-speak means the worst sellers have already sold and buyers are showing up at higher prices each cycle. That is the kind of technical setup that gets retail traders excited before earnings catalysts arrive to either confirm or humiliate them.

Here is the bull case in plain English: the Iran war has been a genuine supply-side shock, pushing fuel and borrowing costs higher for almost every industry. But AI compute demand is structural, not cyclical. When General Atlantic CEO Bill Ford told Bloomberg this weekend that the current moment is "one of the best times in his 30-year career" to invest in growth equity, he specifically cited AI and global entrepreneurship as the engine. Chip demand underpins all of it. Memory, logic, packaging, the whole stack.

The bear case is not nothing, though. The 10-year yield at 4.94% is still painfully high by recent standards, compressing the multiples that growth stocks depend on. Howard Marks of Oaktree reminded the Qatar Economic Forum crowd that markets have been optimist-driven since October 2022, with the S&P more than doubling from trough to recent peaks. That is a long run without a serious reset. If earnings disappoint on forward guidance, elevated sentiment in semis becomes a very fast exit crowded with very slow doors.

The VIX dropping 12.82% in a single session to close at 15.44 tells you the market is not pricing a disaster scenario into earnings season right now. Retail positioning on X skews bullish on chips, financials, and anything tied to AI infrastructure spending. The setup is clean. The risk is that "clean setup" is sometimes just another way of saying "everyone is already in."

Earnings season does not forgive crowded trades. But it does occasionally reward them spectacularly, and right now the crowd is wearing a semiconductor jersey.