Nvidia (NVDA) CEO Jensen Huang's signed leather jacket sold for $960,000 Friday, the same day semiconductor stocks fell into a bear market. The contrast captures an AI boom with a cultural appeal that remains intact even as traders brace for much larger swings in its most important stocks.
Fear has surged in chip stocks while remaining remarkably contained across the broader market. The Cboe SMH Volatility Index uses options prices to estimate expected movement over the next 30 days in the VanEck Semiconductor ETF (SMH). The Cboe Volatility Index ([1](https://finance.yahoo.com/quote/%5EVIX/)) measures the same basic thing for the S&P 500.
Subtracting one from the other shows how much extra turbulence traders expect from chip stocks. That gap recently reached nearly 47 volatility points and remains close to 45.
That is a striking departure from the broad market panic after the "Liberation Day" tariffs were announced in April 2025. When the VIX surged over 50, the chip volatility premium was less than half its current size.
Back then, fear was everywhere. Today, it is concentrated in chips.
The price damage has been just as severe. The sell-off erased roughly $3.3 trillion from global chip stocks by the recent low, while the PHLX Semiconductor Index (^SOX) broke below its key 12,000 level.
The index has since climbed back above 12,000, a positive development but not yet a convincing reversal. The rebound has lacked force, while the volatility premium has barely retreated.
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The damage also extends beyond chips.
Goldman Sachs's high-beta momentum basket — a collection of recent stock winners that tend to swing more than the market — fell by roughly one-third from its June peak. Its July decline was the worst since April 2009 as crowded trades reversed and systematic funds cut exposure.
Still, the broader market has absorbed the rotation. Roughly two-thirds of stocks in the S&P 500, S&P 400, and S&P 600 remain above their 200-day moving averages.
The S&P 500 advance-decline line — a running total that rises when more stocks gain than fall — recently broke to a record high. It has since pulled back to test that old breakout level, which bulls would want to see hold.
If the SOX can hold 12,000 while broader participation stays firm, that would strengthen the case that the market is digesting the AI unwind. Losing it again would suggest the stress is starting to escape the chip trade. Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.
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