Technology stocks could face a decline of as much as 75% from their peaks, according to a new warning from veteran market strategist Gareth Soloway.
According to Soloway, the ongoing weakness in semiconductor and memory stocks may be an early sign of a broader correction across the sector, he said in an interview with David Lin published on July 17.
The strategist said markets are beginning to look beyond the current boom in artificial intelligence infrastructure spending and are increasingly focused on future supply growth and slowing demand momentum.
The warning comes as several high-flying chipmakers and memory stocks have already suffered steep declines after posting record gains during the AI-driven rally.
Soloway pointed to the recent weakness in memory and semiconductor stocks as evidence that the market is starting to price in changing industry fundamentals.
According to his analysis, investors are looking roughly 12 months ahead and anticipating increased memory production capacity as new manufacturing facilities come online.
“The first thing we have to understand is that markets are always looking 12 months in advance.<…> The semiconductors eventually will see downside of as much as 75%. That’s what history has told us. This time is not different. It’s no different than the AI revolution or again the internet revolution. They’re the same in terms of earth-changing and game-changing technologies. But at the same time, bounces will happen,” Soloway said.
At the same time, technology companies are exploring ways to reduce costs and maximize existing memory inventories after a period of elevated prices.
Cracks already appearing in chip stocks
The shift in sentiment has already been reflected in stock performance. Memory-chip giant Micron Technology (NASDAQ: MU) has fallen roughly 36% from its all-time high to recent lows, despite reporting strong earnings results during the period.
The decline has fueled concerns that the broader semiconductor stocks selloff could extend further if expectations for AI-related demand begin to moderate.
While Soloway remains constructive on the sector in the short term and expects potential rebounds after the recent pullback, he argued that history suggests major technology booms are often followed by significant corrections.
He compared the current AI investment cycle to previous transformative technology revolutions, including the internet era, noting that groundbreaking innovations can still experience substantial valuation resets after periods of excessive optimism.
The strategist believes semiconductor stocks could experience temporary rallies after their recent correction but maintains that the longer-term risk remains skewed to the downside.
The warning arrives as investors debate whether the recent weakness in memory stocks represents a healthy consolidation or the start of a larger technology stock market correction.
The AI trade has been one of the strongest themes on Wall Street over the past several years, driving massive gains across semiconductor manufacturers, data-center suppliers, and hardware companies.
However, growing supply expectations, rising competition, and questions about long-term demand sustainability have started to pressure some of the sector’s biggest winners.
