With 10-Year Treasury yields topping 5%, high rates are hitting capital-heavy chipmakers where it hurts—their long cash-flow duration and massive capex debt. But reading $SOXX vs.$IGV purely as a short-term rate reaction misses the bigger picture.
This isn't just macro noise; it’s Phase 2 of the AI cycle. We’re moving from the "shovel sellers" (hardware) to the "shovel users" (software) who are actually turning AI into balance sheet revenue through hybrid subscription models. When cost of capital is high, asset-light software generating immediate free cash flow will always win over capital-intensive chip foundries.
Buy IGV, be ‘selective’ with SOXX.
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