The AI Trade Just Had Its Worst Stretch in Months. Here Are 3 Reasons the Sell-Off Could Be a Buying Opportunity.
The spending fueling the boom hasn't let up, so should investors be buying the dip?
Overview
The artificial intelligence (AI) trade just went through its roughest stretch in months. After a nine-week run higher, the major indexes pulled back last week, and the selling peaked on Friday, when the Nasdaq Composite fell about 4.2% -- its steepest single-day drop since early 2025. Chip stocks took the worst of it, with the broad semiconductor group sliding about 10% in that single session.
The sell-off appeared to be tied to several things. Broadcom (NASDAQ: AVGO) posted record results but stopped short of raising its full-year outlook for AI chips, a hotter-than-expected May jobs report pushed bond yields higher and revived worries about a possible interest rate increase, and renewed tensions in the Middle East added to the unease. All told, about $1.3 trillion in value came off U.S.-traded chipmakers on Friday.
Details
But the businesses behind those stocks look as healthy as ever. And shares briefly bounced, with the Nasdaq rising about 0.9% on Monday as the names that led the drop led the recovery. But skittishness in the sector returned on Tuesday.
Source
Originally published at www.fool.com.