Over Two-Thirds of Tech Stocks Are in Bear Territory
A broad selloff is hitting AI-linked tech names. Semiconductor stocks are leading the decline as investors lock in Q2 gains.
A sharp pullback is sweeping across the technology sector, with more than two-thirds of tech stocks now trading at least 20% below their recent peaks — a threshold widely considered bear-market territory for individual equities. The decline is raising fresh questions about the durability of the artificial intelligence investment boom that drove markets to record highs earlier this year.
Semiconductor stocks, which emerged as the primary beneficiaries of the AI spending surge, are absorbing some of the heaviest losses. Investors who piled into chip makers during a blockbuster second quarter are now rotating out, taking profits after an extraordinary run-up that made the sector one of the hottest trades on Wall Street.
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The broader concern among market watchers is whether the retreat signals a simple, healthy correction in an overextended trade — or something more structural. The AI narrative propelled valuations to historically elevated levels, leaving little room for error when sentiment shifts or growth expectations are trimmed even slightly.
Profit-taking of this scale often follows periods of outsized gains, and the second quarter delivered exactly that for many technology names. Still, the speed and breadth of the current drawdown — spanning the majority of the sector rather than isolated names — suggests the selling pressure carries more weight than a routine pullback.
Whether the AI trade finds its footing will likely depend on upcoming earnings guidance from major semiconductor and cloud-infrastructure companies, whose forward outlooks have historically set the tone for the broader tech sector. Continue reading at MarketWatch.com
