AI-linked sell-off drives semiconductor fund down more than 23% in a month

Investors are finding gains outside technology, but moving away from AI-linked stocks is not necessarily making the broader market safer. The iShares Semiconductor ETF has fallen more than 23% over the past month, CNBC reported on November 5, as concerns about borrowing to finance AI infrastructure collide with technology’s outsized presence in major U.S. indexes.

Gains elsewhere do not cancel tech’s weight

The Dow Jones Industrial Average rose 4.1%, while the equal-weighted S&P 500 gained more than 5%. The Dow has much less exposure to AI than the S&P 500 or Nasdaq-100, making its advance a contrast to the semiconductor fund’s steep decline.

Normally, money moving between sectors would be a positive sign for the market. The constraint now is concentration: technology accounts for 37% of the S&P 500’s total market value. Selling in that sector therefore carries substantial weight at the index level, even when investors are finding opportunities in businesses with less exposure to the AI buildout.

Borrowing puts the buildout under scrutiny

CNBC attributed the semiconductor retreat to fears that AI-linked companies are borrowing too much for their capital investment plans. That is a concern about how the infrastructure expansion is being financed—not simply a judgment about the usefulness of AI. The pressure is falling on shares tied to the spending needed to sustain that expansion.

Barclays strategist Venu Krishna linked the sharp selling in technology and other AI-related stocks to concerns about the sustainability of the AI infrastructure spending cycle. He described investors shifting toward areas with limited AI exposure.

Thursday’s split leaves the risk unresolved

Thursday’s futures trading extended the divergence. Dow futures rose 300 points after the index’s 1,500-point rally on Wednesday, while Nasdaq-100 futures fell 1%. AI cloud providers CoreWeave and Nebius also declined. These were futures and share-price readings in CNBC’s Thursday update, not final results for the trading day.

Company-specific disappointments were adding pressure as well. Qualcomm shares dropped 12% after the chipmaker issued weaker-than-expected guidance. Its decline had a stated earnings-outlook catalyst, illustrating that the day’s technology weakness was not attributed solely to the financing concerns surrounding AI infrastructure.

BTIG chief market technician Jonathan Krinsky pointed to another sign of persistent weakness: SOXX had closed below its 200-day moving average for four consecutive sessions. He acknowledged opportunities to profit from both rising and falling stocks, but warned that “broad market risk has not been eliminated.” Gains outside technology, in his assessment, do not yet amount to an all-clear.