AI Chip Sector’s Cheapest Valuations Since 2011 Spark Debate on Recovery

Shares in AI chip companies are trading at their most affordable levels since 2011. The Philadelphia Semiconductor Index (SOX) is hovering around 10 times projected earnings over the next two years.

Yet share prices have dropped at a much quicker pace than analyst projections have. Should those forecasts be revised downward, the apparent discount for chipmaker shareholders could prove smaller than expected.

Are AI Chips Cheap or a Value Trap?

Bank of America notes that AI chip stocks currently trade 22% below the broader S&P 500 on an earnings basis. This makes them seem inexpensive relative to the wider equity market.

A caveat exists, however. Those valuations depend on sustained AI expenditure. If large tech firms trim their projected AI budgets for 2027 by only 20%, anticipated profits for chipmakers could decline sharply.

That means stocks that appear cheap today could quickly become pricey if their earnings fall short of what Wall Street anticipates.

AI chips the cheapest they’ve been in 15 years. Trading at single digit PEs. Just as we give birth to super intelligence. pic.twitter.com/36ShalppUS

— Charles Edwards (@caprioleio) November 10, 2026

Why Did Chip Stocks Lose 38% Since June?

The drop was sparked by worries that AI infrastructure spending might slow.

On Nov. 5 alone, the SOX index plunged 12.2% during Wall Street’s crash. That was its worst single-day performance since March 2020.

Nvidia (NVDA) ended Monday at $178.67, 26% below its 52-week peak, having entered bear market territory.

Leadership concerns add further strain. CEO Jensen Huang acknowledged having an affair with a former top executive at Megaspeed, a Singapore-based buyer of Nvidia chips.

US authorities are said to have concluded she was an agent of Chinese intelligence — an allegation that Beijing denies. Nvidia’s board launched an internal investigation on Nov. 8 while continuing to support Huang.

A Nov. 11 congressional deadline now comes just days before Nvidia releases earnings on Nov. 17.

Can AI Chip Stocks Recover? Here Are the Key Levels to Watch

AI chip shares have begun to recover from last week’s rout, but the broader market trend stays negative.

The Philadelphia Semiconductor Index (SOX) climbed nearly 11% over two trading sessions, closing Monday at 10,033.93. Still, the index is having trouble breaking through key price points.

For investors, three possibilities are important.

• Bullish scenario — Above 10,100: A close above this level would indicate the rebound is building steam. The next targets would be 10,700 and 10,869, where sell pressure might re-emerge.
• Bearish scenario — Below 9,976: If the index cannot hold this level, the recent bounce could fizzle. That would bring 9,000 back into play, with a possible drop to 8,704.
• Momentum is improving: The Relative Strength Index (RSI), which gauges buying versus selling pressure, has bounced to roughly 40 after hitting oversold territory on November 5. This points to selling pressure easing, though buyers have not yet seized control.

The next big test comes on November 17, when Nvidia reports earnings. Strong numbers could help revive confidence in AI chip stocks, while weak guidance might set off another sell-off.

Bank of America still expects the sector to drop another 10% or so before bottoming in early 2027. That implies the recent upturn may be premature, even with valuations at historic lows.