AI Chip Stocks are Cheapest in 15 Years. Is the Sell-Off Over?

AI chips are trading at their cheapest valuation since 2011. The Philadelphia Semiconductor Index (SOX) sits near 10 times two-year forward earnings. However, prices have fallen far faster than analyst forecasts. If those estimates get cut, chipmaker shareholders may find the discount smaller than it looks. Are AI Chips Cheap or a Value Trap? According to Bank of America, AI chip stocks are now trading at a 22% discount to the broader S&P 500, based on expected earnings. That makes them look relatively cheap compared with the rest of the stock market. But there is a catch. These valuations assume that AI spending will remain strong. If major technology companies cut their planned AI investments for 2027 by just 20%, chipmakers could see their expected profits fall sharply.

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