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The semiconductor trade that carried portfolios through June is over.
For weeks, traders chased every breakout in names that had already run too far, too fast. It worked until the momentum dried up and the sector lost the buyers that kept the whole thing propped up.
At this point, there’s no reason to force anything in semiconductors. The next meaningful catalyst doesn’t show up until the earnings cycle ramps back up in late July.
That’s when you finally get fresh numbers, updated forecasts and real clarity on whether the sector can sustain another leg higher. Until then, the space is likely to drift with no reason for institutions to reengage.
Note: The timing matters. When a sector becomes extended and the next scheduled data point is weeks away, the highest-probability move is often sideways.
That’s why waiting for the next earnings wave is the smarter approach instead of reacting to noise in the middle of a cooling trend.
Software Is Quiet — And That’s the Opportunity
While chips cool, software is starting to look interesting again.
The group has been oversold, and the rotation now building isn’t random — traders are waking up to the fact that heavy AI spending has put real pressure on margins across big tech.
All those AI features that sounded great on earnings calls came with massive compute costs that investors didn’t fully price in at first.
As the market adjusts to that reality, software names that have been left behind are starting to find support.
Many of these companies benefit from AI adoption without carrying the infrastructure burden themselves.
That’s why the tape is getting tighter and why the group is beginning to act like capital is quietly sliding back in.
Biotech Is Quietly Heating Up
Biotech is another area where I’m seeing fresh momentum. We’ve already seen strong trades recently in Broad Biotech (XBI), and the setups continue to improve.
What’s driving it isn’t hype — it’s the practical use of AI in drug discovery, trial optimization and early-stage compound screening.
These tools dramatically shorten development timelines, which is exactly what investors want to see in a sector where time is money.
Biotech doesn’t need a market-wide rally to move either. When a pipeline catalyst hits or a dataset surprises to the upside, these names can advance on their own schedule.
That independent momentum is valuable in a market where the old leaders are losing steam.
So today I’m continuing to rotate out of overextended chips and into software and biotech — the two areas where institutional buying appears to be forming the next wave.
When late July arrives and earnings kick back in, I’ll reassess the semiconductor landscape with fresh data instead of guessing in the dark.
To better trading,
Alex Reid
WealthPin
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