Big Tech is dodging the chip stocks wipeout: AlphaCheck

Big Tech stocks, led by the Magnificent Seven, have rebounded 8% since late June, while semiconductor stocks have fallen 12%, indicating a rotation out of crowded hardware trades rather than a broad growth unwind. Apple has surged 13% and is near its all-time high, and market breadth is improving with advance-decline lines hitting new highs.

Memory stocks are in a bear market https://finance.yahoo.com/markets/article/micron-samsung-sk-hynix-just-dragged-memory-stocks-into-a-bear-market-154549356.html . But the Magnificent Seven are back on offense — leading the market higher once again. Since the late-June turn in growth stocks, the Roundhill Magnificent Seven ETF MAGS https://finance.yahoo.com/quote/MAGS/ is up 8%, while the S&P 500 minus the Mag Seven — tracked by the Defiance Large Cap ex-Mag 7 ETF XMAG https://finance.yahoo.com/quote/XMAG/ — is basically flat. Meanwhile, the PHLX Semiconductor Index ^SOX https://finance.yahoo.com/quote/%5ESOX/ is down 12%. The chart below, built using Yahoo Finance's AlphaSpace https://alphaspace.finance.yahoo.com , shows that same split over the past five trading days, with megacaps gaining ground while semiconductors break down. This embedded content is not available in your region. That is a sharp reversal from late June, when the market's biggest AI stocks had just absorbed a $2.7 trillion wipeout https://finance.yahoo.com/markets/article/big-techs-27-trillion-ai-bill-comes-due-chart-of-the-day-100000100.html?utm source=chatgpt.com and investors were questioning whether megacap leadership had finally cracked. Instead, Big Tech is back in charge — and the rebound is not limited to seven stocks. Cybersecurity stocks are back near records as software surges https://finance.yahoo.com/markets/article/softwares-strongest-pocket-is-back-near-records-chart-of-the-day-165443761.html , while strength is also showing up in biotech, tech disruptors, China tech, crypto, and aerospace & defense. The market is treating the chip stock wipeout as damage to a crowded hardware trade, not a reason to dump every corner of the growth trade. Apple AAPL https://finance.yahoo.com/quote/AAPL/ is the standout. The stock is leading the Magnificent Seven higher — up 13% since the late-June turn — after a textbook retest of its old ceiling near $275, a former resistance level that has now turned into potential support. Apple is back within 1% of its all-time closing high. This embedded content is not available in your region. Even Nvidia NVDA https://finance.yahoo.com/quote/NVDA/ is outperforming the chip group. Of the 60 semiconductor stocks in the Yahoo Finance basket, it was one of only two names in the green, bouncing off its 200-day moving average — even as the SOX dropped more than 4%. The broader tape also looks better than the chip wreck suggests. The NYSE and S&P 500 advance-decline lines https://en.wikipedia.org/wiki/Advance%E2%80%93decline line — running totals of how many stocks are rising versus falling — are printing new highs. That helps resolve a participation problem https://finance.yahoo.com/news/the-stock-markets-big-breakout-still-needs-an-under-the-hood-check-chart-of-the-day-100030247.html that had been hanging over the spring breakout, when the S&P 500 was making new highs before the average stock confirmed. The chip sell-off is real. But as long as megacaps keep leading, software keeps confirming, and breadth keeps making new highs, the wipeout still looks more like rotation than a full-market growth unwind. Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com. Click here for in-depth analysis of the latest stock market news and events moving stock prices Read the latest financial and business news from Yahoo Finance