Artificial intelligence could be the market’s source of near-term pain, as investors dump stocks linked to the technology and instead move into other sectors. The iShares Semiconductor ETF (SOXX) has tumbled more than 23% over the past month on fears that AI-linked companies are borrowing too much money for their capital investment plans. Intel and Cerebras Systems are down nearly 50% in that time, the worst-performing SOXX members. Outside of AI, the market appears to be doing fine. The Dow Jones Industrial Average , which has far less exposure to the technology than the S & P 500 or Nasdaq-100 , is up 4.1% over the past month. The equal-weighted S & P 500 has climbed more than 5%. .DJI .NDX 1M mountain Dow Industrials vs Nasdaq-100 1-month chart Normally, a rotation like this would be positive for the market. But with so much money concentrated in tech — the S & P 500 tech sector makes up 37% of the benchmark’s total market capitalization — it’s detrimental at the index level. “Concerns about the sustainability of the AI infrastructure supercycle recently triggered a sharp sell-off in Tech and other stocks tied to the AI narrative, prompting a rotation into areas with limited AI exposure,” wrote Barclays strategist Venu Krishna. That rotation is on clear display again Thursday. Dow futures popped 300 points, putting the 30-stock average on pace to build on its monster 1,500-point rally from Wednesday. Nasdaq-100 futures, meanwhile, dropped 1%, as neocloud stocks CoreWeave and Nebius fell. Qualcomm shares also dropped 12% after the chipmaker issued weaker-than-expected guidance . Adding to the malaise, Goldman Sachs traders signaled that Democrats sweeping control of the House and Senate in this week’s midterm elections could keep pressure on tech. “Legislative restrictions are difficult to quantify … but building will become more expensive, complicated and slower. Multiples have compressed enormously, positioning was already derisked and another aggressive wave of selling followed,” they said. BTIG chief market technician Jonathan Krinsky pointed out that the SOXX has now closed below its 200-day moving average for four consecutive sessions. “There are clearly things working, and we will continue to look for tactical opportunities on both the long and short side, but ultimately this factor volatility is unlikely to go quietly into the night … broad market risk has not been eliminated,” he said.
The rotation out of tech is becoming a risk for the broader market
Nov 5, 2026
