Over Two-Thirds of Tech Stocks Now in Bear Territory Amid AI Selloff
More than 67% of tech stocks have dropped at least 20% from recent highs as investors lock in gains after a strong Q2.
A broad and punishing retreat has swept through the technology sector, with more than two-thirds of tech stocks now sitting at least 20% below their recent peaks — the threshold that defines a bear market for individual equities. The selloff is raising urgent questions about the durability of the artificial intelligence trade that powered Wall Street's hottest rally in years.
Semiconductor companies, which surged on the promise of AI-driven demand for chips and computing infrastructure, have been among the hardest hit. Investors who rode those names to outsized gains during a blockbuster second quarter are now aggressively locking in profits, amplifying the downward pressure across the broader tech landscape.
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The scale of the pullback signals more than routine profit-taking. When a majority of stocks within a sector enter correction or bear territory simultaneously, it typically reflects a reassessment of valuations rather than isolated company-specific concerns. AI enthusiasm drove tech multiples to elevated levels, and the current retreat suggests the market is demanding clearer evidence that AI investment will translate into near-term earnings growth.
For retail and institutional investors alike, the correction forces a difficult recalibration. Positions built on AI optimism must now be weighed against the reality that even transformative technologies go through painful digestion periods before the next leg higher. Whether the current drawdown represents a healthy reset or the beginning of a more sustained unwind remains the defining question for markets heading into the second half of the year.
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