Intel is pushing there “encrypted enclave” which supposedly protects the host from being able to read or write guest memory. However, I have serious doubt as it is a black box system. It also is very problematic when a security issue (or backdoor) is found as your data is basically exposed
Ultimately you are right about this which is sad. I wonder if at some point there could be a zero knowledge cache for https. Maybe double encrypt it and have the client decrypt it fully.