A sharp selloff in technology stocks hit markets overnight, with the Nasdaq falling 2%, the S&P 500 losing 1.3%, and semiconductor shares plunging 7.8%. The moves prompted a wave of commentary from U.S. analysts and portfolio managers on whether the drop is a healthy correction or the start of something worse.
Jim Paulsen, the former chief strategist at The Leuthold Group, said the current unwind in artificial intelligence names is historically unusual. He noted that even in the dot-com bubble there was only one major round of heavy selling before the broader market cracked. Paulsen has also pointed to warning signs in recent months, including the widening gap between technology and growth stocks and the rest of the S&P 500. “It’s quite amazing to see how the crowd favorites have now become kind of second priority,” he said about the slide in leading chip stocks.
Bret Kenwell, an investment and options analyst at eToro, called it a “perfect storm” that could last for weeks. He said the Federal Reserve sounded more hawkish than expected in its latest statement, and that markets may need about two weeks to catch their breath. David Rosenberg, senior economist and founder of Rosenberg Research, described the semiconductor sector as going through a “cruel” round of profit-taking and questioned whether retail investors would step in to buy the dip, given already elevated U.S. stock exposure.
Joe Mazzola, head of trading and derivatives strategy at Charles Schwab, said investors now need to see whether the rally broadens beyond semiconductors to decide if this is only a correction or a deeper break. He said it looks less like a broad macro panic and more like a group of stocks finally being stress-tested after a long run. By contrast, Morgan Stanley senior portfolio manager Andrew Slimmon said the selloff is healthy because AI trades had become too crowded, calling it an opportunity for investors who want more technology and chip exposure. Wedbush analyst Dan Ives was even more bullish, calling the decline a “golden opportunity” and saying AI demand and the chip sector have shown “no cracks in the armor.”
