technology Stocks Shares could face a decline of up to 75% from their peak, according to a new warning from veteran market strategist Gareth Solloway.
According to Soloway, the continued weakness in… Semiconductors Memory stocks could be an early sign of a broader correction across the sector, he said at a news conference interview With David Lean Published July 17.
The strategist said that the markets are starting to look beyond the current boom artificial intelligence Infrastructure spending is increasingly focused on future supply growth and slowing demand momentum.
The warning comes as several already high-flying chipmakers and memory stocks suffered sharp declines after posting record gains during the AI-led rally.
Solloway pointed to recent weakness in memory and semiconductor stocks as evidence that the market is starting to price in the changing industry fundamentals.
According to his analysis, investors are looking approximately 12 months ahead and expect memory production capacity to increase as new manufacturing facilities come online.
“The first thing to understand is that markets are always looking 12 months in advance. <…> Semiconductors will eventually see a downside of up to 75%. This is what history tells us. This time is no different. It’s no different than the AI revolution or the Internet revolution again. It is the same in terms of earth-changing, game-changing technologies. But at the same time, there will be bounces,” Soloway said.
Meanwhile, technology companies are exploring ways to reduce costs and maximize existing memory inventory after a period of high prices.
Cracks are already appearing in the chip stocks
The shift in sentiment has already been reflected in stock performance. Memory chip giant Micron Technology (NASDAQ: MU) fell nearly 36% from all-time highs to recent lows, despite reporting strong earnings results during the period.
The decline has raised concerns that the broader sell-off in semiconductor stocks could extend further if expectations for AI-related demand begin to moderate.
While Solloway remains positive about the sector in the short term and expects potential rebounds after the recent decline, he said history suggests that major technology booms are often followed by big corrections.
He compared the current investment cycle in AI to previous transformative technological revolutions, including the Internet era, noting that groundbreaking innovations still face significant recalibration in valuation after periods of excessive optimism.
The strategist believes that semiconductor stocks may see temporary gains after their recent correction, but stresses that long-term risks are still tilted towards the downside.
The warning comes as investors debate whether the recent weakness in memory stocks represents a healthy consolidation or the beginning of a larger correction for the technology stock market.
AI trading has been one of the hottest topics on Wall Street over the past several years, driving massive gains across semiconductor manufacturers, data center suppliers, and hardware companies.
However, rising supply expectations, rising competition, and questions about the long-term sustainability of demand are beginning to put pressure on some of the sector’s biggest winners.
