BTIG's Chief Market Technician Jonathan Krinsky stated that the intense volatility in artificial intelligence-related stocks is creating extreme market divergence, which may have reached unsustainable levels. In a report, Krinsky highlighted the stark contrast between winners and losers: shares of CBRE Group plunged 24% from a record high over two days, marking their worst weekly decline since the financial crisis, while data center REIT Equinix surged 11% in a single trading session, achieving one of its best daily performances in nearly a decade.

The BTIG strategist warned that although this turbulence has largely remained beneath the surface and has not yet significantly impacted major indices, the situation could change quickly. "However, at some point, we begin to worry that weakness will overwhelm strength, and the broader market will become vulnerable," he said.

Krinsky pointed out that the S&P 500 continues to struggle around the 7,000 level, and the latter half of February typically represents a seasonally weaker period. Given the dislocations at the individual stock level, the coming weeks could prove challenging. The software sector is a particularly concerning area, the strategist noted. Krinsky further explained, "The software sector really needs to hold recent lows." He emphasized that while the sector showed characteristics of "capitulation selling" last week, a break below recent lows would signal that a deeper decline is brewing.

Perhaps most critically, the BTIG technical analyst warned that the semiconductor sector must continue to shoulder the burden amid turbulence in other areas. "Given the significant declines in software stocks and various other individual names, the market truly needs the semiconductor sector to continue carrying the weight," he stated. Krinsky cautioned that if the semiconductor sector weakens along with other sectors, "the indices will likely be unable to find stability."