After lifting the market for the past few months, artificial-intelligence names are now dragging the technology sector down. Is it a temporary correction or a sign of a wider reset?

A whopping 69% of stocks in the S&P 500 information-technology sector are currently down over 20% from their 52-week intraday highs, which market analyst Mike Zaccardi flagged in an X post and Dow Jones Market Data confirmed. They could be considered in a bear market by some definitions.

Large semiconductor stocks have been hit especially hard. Shares of Micron Technology have fallen 25% from their recent highs, while Broadcom’s stock is down 21% and Marvell Technology’s stock is down 30%.

While the magnitude of the selloff may seem concerning, some analysts think it’s a natural progression following a big run-up. Investors may be looking to lock in some profits after an impressive second quarter, which saw the PHLX Semiconductor Index achieverecord gains.

“We’ve seen some broader profit-taking to start Q3 in July here across tech infrastructure — Tuesday had a pretty steep sell-off for chip equipment, for example,” Morningstar equity analyst William Kerwin told MarketWatch over email.

He pointed out that over the past few quarters, tech stocks have come under pressure in the month following earnings, then rebounded leading up to the next report.

Memory and storage names kicked off the first half of 2026 on a blistering run, but they’ve since suffered a sudden and aggressive selloff from their late-June peaks. Shares of Seagate and Western Digital have joined Sandisk and Micron in falling over 20% in the past couple of weeks. These historically cyclical businesses have been at the center of a heated debate as investors determine whether the AI boom will permanently increase demand for their products.

Morningstar’s Kerwin also pointed to Samsung’s preliminary earnings earlier this week as a catalyst for the recent selloff. While Samsung reported a 19-fold increase in profits on a year-over-year basis, Kerwin said some investors expected more from the overall report.

The release “could portend some deceleration of steep memory-price increases for the likes of Micron,” according to Kerwin.

While spot price increases for dynamic random-access memory and NAND have moderated recently, Evercore analyst Amit Daryanani believes long-term hyperscaler agreements and contract pricing provide a better picture of the memory market. He believes long-term customer agreements will fundamentally improve revenue visibility and predictability for these companies.

“We think that despite the near-term volatility, memory remains an attractive part of the tech ecosystem,” Daryanani said in a Wednesday note. “There is a logical element of profit-taking as investors trim winners ahead of the next earnings prints to reassess pricing durability and hyperscaler capex cadence.”