Technology stocks are getting hit hard, and for a lot of individual investors the instinct will be to do something immediately. That usually means selling whatever hurts most. I understand it. When a stock you own is down 15%, 20%, or more in a short period, the screen starts to make the decision for you. The problem is that broad selloffs tend to mix businesses that have very different problems. Some stocks are falling because the valuation got ridiculous. Some are falling because investors are finally questioning the returns on enormous AI spending. Some are being sold simply because they sit in the same funds and portfolios as everything else. Those are not the same situations, and treating them as if they are where investors can do real damage to themselves.
The easiest thing to say right now is that the AI trade is breaking. I am not convinced that is the useful conclusion. AI demand can remain very strong while many AI-related stocks still fall. In fact, that may be exactly what is happening. The market spent a long time rewarding companies for announcing more spending, more data centers, more chips, and more capacity. At some point investors were always going to ask what return they were getting on all that capital. That question matters far more to me than whether the next quarterly number shows another big increase in AI demand.
