In a recent report, BTIG highlighted significant concerns regarding the semiconductor sector, particularly in light of an 11.4% drop in the Philadelphia semiconductor index (SOX) last week, marking its worst performance since April 2025. The firm noted that the iShares semiconductor ETF (SOXX) has faced nine consecutive daily losses, indicating a troubling trend.
BTIG's managing director pointed out increasing doubts about the AI sector, suggesting that while a relief rally may occur, historical data indicates that such gains may not be sustainable. Specifically, after previous instances of significant weekly losses in SOX, positive returns were only seen 43% of the time the following week.
The report also questioned the resilience of the S&P 500, as most sectors have seen declines of at least 9% since June, despite the index's relatively modest maximum drawdown of 5%. For investors in semiconductor stocks, BTIG identified $490 as a critical support level for SOXX, warning that a drop below this threshold could lead to further declines towards the 200-day moving average around $468.
Overall, BTIG maintains a bearish outlook, suggesting that any temporary rallies should be viewed as opportunities to reduce exposure