Semiconductor investors didn't get the recession memo. They have anticipated the industry’s improvement for many months. The S&P 500 Semiconductors industry stock price index has jumped 55.8% from its late 2022 low, as of Tuesday’s close (chart). The index remains 20.9% off of its November 29, 2021 peak.
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As is often the case in this industry, investors jumped into semiconductor shares before seeing the industry’s results actually turn around. Revenue for the S&P 500 Semiconductors industry this year is expected to decline 10.1%, before increasing 14.3% in 2024. Likewise, the industry’s earnings are forecast to drop 21.2% this year before rebounding by 31.4% next year. The industry's forward earnings is highly correlated with worldwide semiconductor sales (chart). Both have been falling since early last year.