The chip rally has a dark side - and a rare market risk is at its highest level since 2015

The chip rally’s “dark side” is dispersion: while major indexes look calm, risk may be concentrated in individual stocks, leaving the semiconductor sector and leaders such as AMD and Micron exposed. The article argues that investors perceive little risk in the S&P 500 overall because it is diversified, yet volatility is widening between winners and losers. It cites S&P 500 dispersion measured via implied volatility dispersion among constituents, using the Cboe Volatility Index (VIX) around 17, described as not signaling strong fear. However, the spread between single-stock implied volatility (tracked by VIXEQ) and index implied volatility (VIX) is near the widest level since 2015, including the pandemic crash of March 2020 and the “tariff tantrum” of April 2025. The piece notes that S&P 500 implied correlations over three months are currently low, meaning a single surprise could rapidly reprice risk and increase correlations. Semiconductors are prominent among top holdings, including Nvidia, Broadcom, and Micron, while Meta and others show weaker relative performance.