AI, Chip Stocks Over Software: Retail Traders Lean More On Semiconductor Plays Amid Tech Selloff

• Tech stocks have been under pressure for the past two months, with the ongoing U.S.-Iran war adding to the strain.
• Investors have rotated money into defensive, income-generating sectors such as energy, utilities and consumer staples.
• Chips stocks have been more resilient than other tech sub-sectors, with the key sectoral ETF, SOXX, rising 12% year to date vs. a 0.2% drop in the S&P 500.

Amid massive volatility in the market due to a selloff in tech stocks and the escalating military conflict between the U.S. and Iran, retail investors are still buying the dip in semiconductor and artificial intelligence-linked stocks, according to a Stocktwits poll.

About 42% of the over 12,000 voters to the poll said they were buying the AI and chips stocks first in the market downturn. Twenty-nine percent voted for software stocks, 18% for cybersecurity stocks and 12% for the cloud infrastructure stocks, which received the lowest votes.

The results suggest that fewer traders expect a rebound in software and cybersecurity stocks, groups that took a greater beating over the last two months over fresh fears of AI-related disruption.

Already worried about an “AI bubble” forming, investors sold off tech stocks, particularly those of niche software companies like Adobe, Intuit, and Salesforce, over fears that AI would shrink their demand. Anthropic’s new Claude agentic AI platform, which can automate several tasks, provided early triggers.

Even though stock performance has been mixed, investor optimism in the semiconductor industry has remained strong, thanks to blowout earnings from Nvidia, Taiwan Semiconductor Manufacturing Co., Broadcom, and Marvell Technologies, as well as the main hyperscalers, Amazon, Microsoft, and Alphabet.

Notably, the iShares Semiconductor ETF (SOXX), which tracks semiconductor companies, has gained 12% year to date, the highest among funds tracking AI companies (Global X Artificial Intelligence & Technology ETF - AIQ), software companies (SPDR S&P Software & Services ETF - XSW), cybersecurity companies (Global X Cybersecurity ETF - BUG), and cloud companies (Global X Cloud Computing ETF - CLOU).

In comparison, the benchmark S&P 500 index has declined 0.2% year to date.

To be sure, investors have rotated money out of technology stocks, including chip companies, to defensive, income-generating sectors such as energy, utilities, and consumer staples.

Utilities, energy, and materials stocks were among the top gainers among the 11 S&P 500 sub-sectors last month. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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