Despite "unprecedented" profit increases, the semiconductor index has fallen into bear market territory. Korean memory-chip manufacturer SK Hynix reported roughly $65 billion in profit for the quarter ended June 30, a 13-fold increase year-over-year. However, its shares fell 8.7% after the results. Similarly, Advanced Micro Devices reported record sales and beat analyst estimates, yet its shares tumbled nearly 8% after hours.

These outstanding results still fell short of Wall Street’s sky-high expectations for chip companies. While upbeat results from companies like Caterpillar and Palantir boosted major indexes, the semiconductor sector faces a tougher challenge. Analysts are revising forecasts for memory companies, making it harder to clear the bar even as soaring demand for computing power from AI companies fuels manufacturers' profits.

With over half of the PHLX Semiconductor Index reporting, profits have grown a collective 144% from a year earlier. Nevertheless, the index has retreated about 17% from its June record and briefly entered bear-market territory for the first time since 2024.