U.S. Stock Market: 69% of Tech Stocks in 'Bear Market'... Is the AI Rally Losing Steam?

▲ U.S. Stocks, Semiconductor Stocks, Bear Market / AI-generated image

Tech stocks, which led the artificial intelligence rally, have begun to weigh down the market, with 69% of S&P 500 Information Technology sector stocks falling more than 20% from their recent highs.

According to U.S. economic media MarketWatch on July 8 (local time), 69% of the stocks included in the S&P 500 Information Technology sector have fallen more than 20% from their 52-week intraday highs. Market analyst Mike Zaccardi pointed out this trend on X (formerly Twitter), and Dow Jones Market Data confirmed it.

Large semiconductor stocks were particularly hard hit. Micron Technology (MU) fell 25% from its recent high, Broadcom (AVGO) fell 21%, and Marvell Technology (MRVL) dropped 30%. After a strong Q2 rally, investors engaged in profit-taking, leading to a sell-off across AI infrastructure-related stocks.

William Kerwin, an equity analyst at Morningstar, stated, "Broad profit-taking occurred across tech infrastructure in early Q3 in July, and on Tuesday, the sell-off in semiconductor equipment stocks was quite steep." Kerwin explained that in recent quarters, tech stocks have shown a pattern of being pressured in the month following earnings announcements and then rebounding ahead of the next earnings report.

Memory and storage stocks also joined the sharp decline. Seagate (STX), Western Digital (WDC), SanDisk (SNDK), and Micron have all fallen more than 20% in recent weeks. Kerwin identified Samsung Electronics' preliminary earnings as a catalyst for the recent sell-off, noting that while profits increased 19-fold year-over-year, they fell short of some investors' expectations.

Amit Daryanani, an analyst at Evercore, commented that despite short-term volatility, memory remains an attractive area in the technology ecosystem. Daryanani stated, "It's a form of profit-taking where investors are reducing their winning positions to re-examine price sustainability and the pace of hyperscaler capital expenditures ahead of the next earnings reports."

[Key Article Summary]

- 69% of S&P 500 Information Technology sector stocks fell more than 20% from their 52-week intraday highs.

- Micron fell 25%, Broadcom 21%, and Marvell 30%, highlighting the correction in large semiconductor stocks.

- Analysts believe that while profit-taking occurred after the Q2 surge, the long-term attractiveness of the memory market remains.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*