BTIG Warns of Prolonged AI Sector Decline Amid Chip Sell-Off
BTIG, LLC predicts a long-term decline for the AI sector as semiconductor stocks plunge globally due to leaner AI models and macroeconomic headwinds.
Financial services firm BTIG, LLC issued a research report warning investors to reduce exposure to semiconductor stocks during any potential rebounds. The firm predicts a prolonged decline for the artificial intelligence sector that could extend into 2027, citing increasing doubts about the AI complex. This outlook follows a severe downturn where the Philadelphia semiconductor index recorded an 11.4% loss in a single week, its worst since April 2025.
Global markets continued to slide on Monday, with Asian chipmakers falling more than 2% to their lowest levels since July. This volatility was triggered by the release of a leaner AI model from China's DeepSeek, which sparked fears that future models will require less memory and thus reduce chip demand. The slump affected major players including Taiwan Semiconductor Manufacturing Co. and SK Hynix.
In the United States, the VanEck Semiconductor ETF declined nearly 10% during the week of October 12 as investors rotated capital into energy and financials. This sell-off was compounded by deteriorating liquidity and concerns over the funding capabilities of CoreWeave Holdings Inc. Market recovery now depends on stabilizing neocloud services, a decrease in oil prices, and a successful initial public offering from Anthropic to restore investor sentiment.
