The AI bull market has reached a critical crossroads, and the semiconductor market is once again debating whether to buy at 1995 or 2000.

According to Mars Finance, on June 23, the core battleground for AI trading is shifting from large-cap tech stocks to semiconductors, but this surge is beginning to exhibit characteristics of a historically frenzied rally. The Philadelphia Semiconductor Index (SOX) is still trading within a steep upward channel, and the strategy of buying on pullbacks to the 21-day moving average has remained effective this year. However, this trade is becoming increasingly crowded. The SOX is currently about 23% above its 50-day moving average, which, while not reaching the extreme levels seen at the May highs, is clearly overbought in the short term. More noteworthy is that the SOX's monthly RSI has risen to levels near those seen during the dot-com bubble. This indicates that the semiconductor trend remains strong, but momentum has entered a range typically only seen during historical frenzies. Fund flows are also changing. The SOX-to-Magnificent 7 ratio has risen to its highest level since 2019, suggesting that investors are using semiconductors instead of large-cap tech stocks to express their AI themes. Goldman Sachs data also shows that the net exposure to the Magnificent 7 has recently declined, suggesting that these tech leaders are becoming a "source of funds" for AI-driven rally trading. The volatility market is sending more complex signals. The recent sharp rise in the VXN/VIX ratio indicates a rapid increase in the volatility of tech stocks relative to the broader market. The Market Ear believes this combination of rising spot prices and rising volatility is unusual, suggesting the market remains strong, but the structure is becoming more fragile, whether it moves up or down. Referring to 1995, the SOX also experienced a sharp rise followed by a painful correction, but that didn't end the bull market; the real frenzy didn't begin until the end of 1998. In other words, the current semiconductor rally may simply be the early overheating of a larger cycle. However, if we refer to 2000, the risks are even higher. Comparing the MSCI World Semiconductor Equipment Index with the Nasdaq's performance from 1996 to 2003 shows that the current semiconductor equipment sector's path bears similarities to the late stages of the dot-com bubble. The author doesn't offer a definitive conclusion, leaving the judgment to the market: the current trend shows signs of a bull market continuation as well as the outline of the late stages of a bubble. Speculative fervor in the South Korean market further exacerbates these concerns. On days of high volatility, dealer gamma rebalancing on leveraged and inverse ETFs in South Korea can exceed 20% of the KOSPI's daily turnover, meaning that leveraged products themselves can amplify market fluctuations. Meanwhile, a rare divergence has emerged between stock market and interest rate volatility. A sharp decline in bond volatility typically favors a stronger stock market, but the S&P 500 has not yet fully reflected this signal. For bulls, this could mean further upside potential; for bears, it suggests that the market is not fully pricing in risk.