Over 67% of Tech Stocks Are in a Drawdown — Is the AI Trade Done?
Semiconductor giants are sliding as profit-taking hits after a monster Q2. Here's what traders need to know right now.
The AI trade built one of the most impressive rallies in recent memory, but now the hangover is setting in. More than two-thirds of tech stocks are sitting at least 20% below their recent highs — and that's not a rounding error. That's a bear market by definition, sector-wide.
Semiconductors are leading the pain. These were the biggest winners when AI hype peaked, so it makes sense they're getting hit hardest now. Investors who rode names like chip makers to blockbuster gains in Q2 are cashing out, and there aren't enough new buyers to absorb the selling pressure. That's how momentum unwinds.
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The key question you should be asking isn't whether AI is real — it is. The question is whether valuations got so stretched that even a legitimate technological revolution can't justify the prices traders paid at the top. History says that's absolutely possible. The dot-com boom was real too, and plenty of stocks still lost 80% before finding a floor.
This doesn't mean you bail on every tech name you own. But it does mean you stop pretending 20%-plus drawdowns are just noise. Manage your position sizes. Know your stop levels. The traders who survive corrections are the ones who respect them instead of averaging down into denial.
The AI story isn't over — but this chapter hurts. Watch how semis behave on the next bounce attempt. If they can't reclaim key levels with conviction, the broader tech sector could have more downside ahead than most bulls want to admit. Continue reading at MarketWatch.com
