Chipmakers just delivered a market move we have never seen before.
On the first trading session of 2026, semiconductor stocks massively outperformed software stocks, creating a record gap inside the tech sector that goes back more than a decade.
Hardware takes the wheel
The VanEck Semiconductor ETF $SMH ( ▲ 3.66% ) jumped 3.7% on the day, while the iShares Expanded Tech Software ETF $IGV ( ▼ 2.91% ) fell 2.9%.
That 6.6 percentage point spread marks the largest single-day outperformance of chip stocks over software stocks since records began in December 2011.
Both ETFs sit under the broader technology umbrella, which makes this kind of split extremely rare. Heading into the session, their rolling one-year correlation sat near 0.8, meaning they usually move together.
A statistically rare move
There have only been three sessions ever, including this one, where $SMH rose at least 1.5% while $IGV fell 1.5% or more.
Before Friday, there had never been a session where $SMH gained 2% while $IGV dropped 2%. The reverse has only happened once, back in November 2024.
In short, this was not normal rotation. It was a full-on divergence.
Why this happened
The opening day of 2026 strongly favored the AI picks-and-shovels trade. Investors piled into chips and hardware while selling more downstream AI software names.
One likely explanation is positioning. Large funds may be keeping overall AI exposure steady while shifting weight from software toward hardware at the start of the year. That kind of rebalancing can spark intraday momentum, forcing other players to follow.
Whether this move sticks or snaps back remains to be seen. But one thing is clear. The market is still telling us that when it comes to AI, silicon comes first.