RBC Capital Markets has downgraded the tech sector from overweight to market weight, following a similar warning from Deutsche Bank. The downgrade is based on signs of decelerating earnings momentum in the semiconductor industry, as noted by Lori Calvasina, head of U.S. equity strategy at RBC.
The iShares Semiconductor ETF (SOXX) has fallen nearly 3% on Wednesday and is down over 19% from its 52-week high. Concerns are growing about the sustainability of capital spending in artificial intelligence, with investors like Paul Tudor Jones predicting significant market challenges by 2027.
Chris Wood from Jefferies has also highlighted fears regarding the commodification of AI, which could negatively impact revenues. Overall, the shift away from tech could lead to broader market performance changes, but it also raises the risk of a wider sell-off