The VanEck Semiconductor ETF (SMH:NASDAQ) is on track for its longest losing streak since May 2025, according to Seeking Alpha. The run of consecutive declines marks the sector's weakest stretch in more than half a year.

SMH tracks the largest listed chipmakers, including NVIDIA, TSMC and Broadcom. Its performance serves as a broad proxy for semiconductor industry sentiment. A sustained slide in the fund signals pressure across designers, foundries and equipment suppliers at once.

What does the streak signal?

The index has now fallen in back-to-back sessions long enough to match its poorest run since last May. Seeking Alpha flagged the milestone in its market coverage. The losing streak predates any single earnings report and reflects broad selling rather than one company's miss.

Semiconductor stocks have driven a large share of equity market gains over the past two years. AI chip demand lifted the sector's weighting in major indices. That concentration cuts both ways. When sentiment turns, the decline spreads quickly through the fund's holdings.

Why are chip stocks selling off?

Investors have grown more cautious on the pace of AI infrastructure spending. Data center buildouts remain expensive, and buyers increasingly demand proof of returns. Any hint that hyperscaler capital expenditure could slow hits chipmakers first, because their order books sit at the front of that supply chain.

Geopolitical risk adds a second layer. Export controls on advanced chips and equipment to China continue to reshape revenue maps for U.S. vendors. TSMC, the fund's heavyweight foundry holding, faces its own calculus between Washington pressure and its Arizona fabs.

Valuation compounds the pressure. The sector's leaders trade at premiums built on sustained triple-digit AI revenue growth. Multiples of that size leave little room for disappointment when guidance wobbles.

How does this compare with May 2025?

The May 2025 reference point matters. That earlier streak set the modern benchmark for sector weakness. Matching it now suggests the current pullback has moved beyond routine profit-taking into more durable de-risking. Investors who bought the AI trade at its peak face the sharpest drawdowns.

The duration of a losing streak, rather than its daily depth, often signals conviction behind the selling. Six straight down sessions imply sellers are rotating out, not merely trimming.

What comes next for the sector?

Near-term direction depends on earnings. The next round of foundry revenue reports and AI accelerator guidance will test whether the sell-off reflects fundamentals or positioning. Analysts will watch SMH's reaction to those prints for evidence of a floor.

Longer term, the industry's capacity additions remain on schedule, and demand for advanced nodes has not evaporated. The question is pricing and margin durability, not volume. If AI spending holds, the current streak may read in retrospect as consolidation within an intact upcycle rather than its end.