Chip Stocks Meet Harvard’s Criteria for a Bubble: Equity Insight

One of the hottest corners of the US stock market, chipmakers, meets the definition of a bubble as measured by professors at Harvard Business School.

The semiconductors sector satisfies three criteria for a bubble based on the definition established in a 2017 working paper by Harvard Professors Robin Greenwood, Andrei Shleifer and Yang You: a two-year price return above 100%, two-year excess return over the S&P 500 of greater than 100% and five-year return of 50%, according to strategists at Ned Davis Research. The strategists warned investors in a research note Monday to avoid semiconductor stocks “when the AI trade turns south.”