Chip sell-off seen as healthy rotation as market breadth improves

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The ongoing sell-off in semiconductor stocks is being characterized by market strategists as a healthy rotation rather than a cause for alarm. Crossmark Global Investments chief market strategist Victoria Fernandez noted that while chips have been hit hard, market breadth has been improving with advancing-to-declining ratios of 1.2 to 1.6, indicating underlying support. She described the high-flying chip stocks as horses that have been running hard and need a rest, and said the market is finding other places to put money. BD8 Capital Partners CEO Barbara Doran added that the pullback reflects profit-taking and risk aversion tied to AI uncertainty, but pointed out that names like Nvidia, Broadcom, and Micron are now trading well below their historical forward price-to-earnings ratios while demand and growth rates remain strong through at least 2027.