For years, investors could count on one thing. Any dip in tech stocks got bought fast.
Last week the buyers went quiet. The big money headed for the door instead.
Bank of America clients sold $10.8 billion in tech stocks last week. That is the heaviest week of tech selling on the bank's books, which go back to 2008.
The size is not the only red flag. As a share of the tech sector's value, the selling was the biggest since 2014.
Who was selling matters, too. This was not small investors cashing out.
It was big funds like pensions and money managers. Those are the slow movers that usually stay put.
The selling was broad as well. Clients dumped a record $14.2 billion across single stocks of every kind in one week.
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Companies usually buy back their own stock. Those buybacks act like a floor under prices.
Last week that floor got thinner. Buybacks fell to their lowest share of market value since late 2023, and the drop was sharpest in tech.
So the steady buyer stepped back just as the big sellers showed up. Chip stocks took the worst of it.
Chips have led the AI trade for two years. When they fall, the whole market feels it.
One popular chip fund, the iShares Semiconductor ETF, fell 10.4% on Friday. An ETF is just a basket of stocks you buy in one trade.
That was its worst drop since the pandemic hit in 2020. The fund bounced on Monday, then slipped again on Tuesday and Wednesday.
A few theories are going around. One says small investors are selling chips to free up cash for the SpaceX IPO on Friday.
The idea is that buyers are saving up to grab SpaceX shares. The bank pushes back on it, though, saying last week's wave came from big funds, not the little guy.
Another theory is simple profit-taking after a long run. A louder one is that the AI trade is cooling.
That worry grew after a data center project in Wyoming paused building. Crusoe CEO Chase Lochmiller said the pause was a customer choice over site issues, not a sign that demand is drying up.
Some traders fear the long AI run is near its end. No one agrees on how big the AI bubble is, or even if there is one.
One chart analyst thinks chips have further to fall. Jonathan Krinsky of BTIG wrote that the slide could keep going, with room for chips to drop another 14% from here.
Friday brings the SpaceX IPO, the next big test of how much risk investors still want.
Quick shakeout or something bigger, the investors who usually buy the dip just sold it instead.
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