Retail Investors Piled Into AI Chip Stocks Before Thursday's Semiconductor Rout, JPMorgan Says

Retail investors aggressively bought AI-linked semiconductor stocks over the past week and were hit hard by Thursday's market selloff. JPMorgan strategist Arun Jain said flows from last Thursday through Wednesday showed retail adding to chipmakers, neocloud providers and memory makers, while buying of the Magnificent Seven weakened. The S&P 500 closed lower Thursday on concerns over excessive AI infrastructure spending, with the semiconductor index falling 6.7% — its biggest one-day drop since June. Top retail picks SanDisk (SNDK), TSMC (TSM) and Nebius Group (NBIS) each fell at least 4%. Tech ETF demand was stronger still: last week's inflows were the second-highest on record, with a single-day record set Friday, lifting the weekly total to 2.1 standard deviations above the historical average. The VanEck Semiconductor ETF (SMH) was among the biggest recipients. JPMorgan data show retail money rotating out of the Magnificent Seven into broader tech since July cloud earnings, indicating investors are widening AI exposure rather than abandoning the trade. BofA data project 66% third-quarter earnings growth for S&P 500 information technology constituents.