The tech sector is in freefall this morning, with the semiconductor complex leading the collapse. SOXL has plunged 16.99% overnight as chip stocks from MRVL (-9.8%) to INTC (-8.5%) and AMD (-7.3%) retreat sharply, eroding the week's geopolitical rally gains. The selloff appears driven by three converging pressures: soft factory data signaling economic cooling, a BofA survey showing 80% of fund managers view chip stocks as overcrowded, and aggressive profit-taking after valuations reached unsustainable levels (LRCX trading at 72.5x despite needing 26% annual growth to justify). The few bright spots—TTWO (+6.4%) on Grand Theft Auto VI optimism and MRNA (+6.3%) on mRNA vaccine news—highlight how scattered conviction has become as investors rotate away from crowded AI infrastructure plays.
Avoid initiating new semiconductor positions until the sector finds a floor; the combination of valuation concern and macro headwinds makes this a seller's market. Consider tactical buys only in established chipmakers with pricing power and diversified end-markets once we see stabilization in QQQ and confirmation that the selloff isn't accelerating. Stay defensive in growth-heavy tech—cash raised here can be redeployed into healthcare (MRNA showing relative strength) or non-tech sectors once semiconductor volatility subsides.