RBC Capital Markets has joined Deutsche Bank in advising investors to avoid the technology sector in the medium term, downgrading it from overweight to market weight and recommending healthcare instead. The rationale is the deceleration of earnings momentum in the chip sector, as measured by the slowdown in upward EPS estimate revisions. The iShares Semiconductor ETF (SOXX) lost nearly 3% on Wednesday and more than 19% from its 52-week high, while the VanEck Semiconductor ETF (SMH) fell more than 2% Wednesday and 5.5% in October. Prominent investors like Paul Tudor Jones and Chris Wood from Jefferies are also warning about risks tied to AI capital spending, comparing the current situation to conditions preceding the dot-com bubble burst in the early 2000s.
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