BTIG’s lead market technician Jonathan Krinsky estimates semiconductor stocks could still fall by another 9-10% after weeks of volatile trading. This comes as AI-driven rally stocks lose momentum, sparking concerns beyond just the tech sector.
Signs Point to Continued Tech Weakness
Since May 2026, Krinsky has cautioned investors about the stretched valuations in semiconductor and AI-related companies. These stocks surged parabolically during the AI boom, but technical indicators revealed a faded momentum before prices started sliding. Market breadth narrowed sharply, suggesting fewer stocks were supporting the rally, which Krinsky sees as a warning signal for further declines.
On July 17, Krinsky told clients it was too early to expect a bottom in these sectors. Ten days later, his view remains firm: the correction is far from over. The semiconductor selloff has rattled portfolios and may extend deeper given the overbought conditions.
Crypto Markets Face Ripple Effects
While BTIG’s reports focus exclusively on semiconductors and traditional tech, the crossover impact on crypto is significant. Institutional investors increasingly handle digital assets as part of broader risk allocations. When they reduce exposure to AI-heavy tech stocks, crypto assets often get trimmed alongside. This correlation means that a deeper tech downturn could amplify selling pressure in digital currencies despite no change in their own fundamentals.
AI-related tokens that surged in tandem with semiconductor stocks now confront a dual challenge: widespread risk-off sentiment and the loss of their AI-driven narrative. Traders tracking crypto markets should monitor semiconductor sector breadth and capital flows for early warnings. Krinsky’s call for ongoing correction implies a risk environment that spills over well outside the chip industry.
This article is for informational purposes only and not a financial advice.
