A sharp global sell-off in technology stocks on Tuesday sent shockwaves through markets, with semiconductor giants Intel, AMD, Micron, and even AI darling Nvidia tumbling. The rout was driven by a confluence of factors: a crash in South Korea’s KOSPI index that triggered a trading halt, resurgent fears of U.S. interest rate hikes, and a valuation reset on the artificial intelligence trade.
Fund manager Tom Hulick advised investors to rotate out of plunging tech names into defensive non-AI stocks like Eli Lilly, GE Vernova, and Panasonic, citing their stable growth and insulation from hardware cycle volatility. In stark contrast, Melius Research’s Ben Reitzes told clients the sell-off is a buying opportunity, particularly in chipmakers Nvidia, Broadcom, Micron, and AMD. Speaking on CNBC, Reitzes said historical patterns show such dips are temporary, and that hyperscalers like Microsoft and Google will continue funnelling enormous infrastructure spending to chipmakers for years to come.
Reitzes was highly critical of Microsoft’s AI strategy, calling it a “mess” and dismissing CEO Satya Nadella’s model-agnostic pivot. He framed AI compute as a 20-year structural trend comparable to oil, arguing that early adopters will outperform laggards. The Direxion Daily Semiconductor Bull 3X Shares ETF plummeted over 23%, while the iShares Semiconductor ETF dropped nearly 8%. Despite the turmoil, the Invesco QQQ Trust remains up 36% over the past 12 months.
The sell-off has spilled over to crypto markets, with risk assets facing downward pressure as traders flee to safety. However, the divergent views on whether this is a short-term correction or a deeper rotation could set the tone for digital assets in the coming sessions.
