Chipmakers could be on the verge of a strong seasonal rally, a historical pattern that, if repeated, might supercharge a rebound already underway thanks to renewed U.S.-China trade optimism and eased export restrictions.
The iShares Semiconductor ETF (NYSE:SOXX), which tracks 34 top U.S. chipmakers, has historically posted robust gains during the second half of May.
In 9 of the past 10 years, the ETF has closed higher in this period, delivering an average return of 4.3%, according to data from Seasonax.
The strongest rally occurred between May 15 and May 31, 2023, when SOXX surged 13% over two weeks. The only negative performance in the past decade came in 2019, when the ETF plunged 10.7% during the same seasonal window.
When extending the data horizon to 20 years, the pattern still holds: 14 out of 20 years ended in gains during this period, with an average return of 2.8%.
3 Catalysts Behind the Chipmaker Rebound
1. Trade War De-escalation
The SOXX ETF is still down 11% year-to-date as of May 8, but that marks a significant recovery from the 30% YTD decline it faced just a month ago. The turnaround was sparked after President Donald Trump announced a 90-day tariff pause, allowing space for negotiation.
The plan includes a 10% universal tariff rate – excluding China – which now faces export duties as high as 145%. Talks with Chinese officials are expected to start this week in Switzerland, led by U.S. Treasury Secretary Scott Bessent.
“China wants to make a deal,” Trump said on Thursday, following his first trade pact with the UK.
2. Eased AI Chip Export Curbs
A second boost for the sector is coming from the Trump administration's move to roll back Biden-era chip export restrictions. These rules had hampered U.S. giants like Nvidia Corp. (NASDAQ:NVDA) and Advanced Micro Devices Inc. (NASDAQ:AMD) from exporting high-end AI chips.
The Department of Commerce confirmed it would rescind or amend the rule, offering immediate relief to chipmakers constrained by performance caps and compliance headaches.
Read also: Chip Stocks Rise As Trump Reportedly Plans To Roll Back Biden-Era AI Export Curbs
3. Earnings Season Tailwinds
Quarterly earnings could provide further upside. Nvidia is set to report on May 28, an event widely watched by markets.
Others, like Applied Materials (NASDAQ:AMAT) and Marvell Technology (NASDAQ:MRVL), will also report results in the latter half of May.
Top Chip Stocks In May: Historical Performance
Some of the most prominent chipmakers have shown remarkable performance during the month of May over the past decade:
| Stock | Avg May Return | Positive May Closes (Last 10 Years) |
|---|---|---|
| Nvidia | +15.0% | 8 out of 10 |
| AMD | +9.7% | 7 out of 10 |
| Broadcom Inc. (NASDAQ:AVGO) | +7.7% | 9 out of 10 |
| Applied Materials | +7.4% | 9 out of 10 |
| Micron Technology Inc. (NASDAQ:MU) | +5.4% | 7 out of 10 |
Notably, Nvidia not only tops the leaderboard in average returns but also ranks May as its best month of the year over the past decade.
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