AI-obsessed investors have poured $52 billion into information technology ETFs since the S&P 500 bottomed in late March, versus just $4 billion into the rest of the market — a 13-to-1 ratio, per Baird Strategas data. Monday's selloff followed calls from Anthropic's Dario Amodei, OpenAI's Sam Altman, and xAI's Elon Musk to slow frontier AI development. The Nasdaq 100 fell 0.9% and the S&P 500 Information Technology Index dropped 1.5%, the worst sector performer.

Corning Inc. plummeted 12%, Vertiv Holdings Co. fell 7.8%, and the Philadelphia Semiconductor Index lost 5.1%. Matt Maley of Miller Tabak & Co. warned that slowed development could raise questions about capital spending, noting the SOX Semiconductors Index remains over 20% below June highs. Michael O'Rourke of Jones Trading Institutional Services LLC said a pause would affect markets and the economy.

Despite the rout, analysts note tech earnings are expected to advance 66% year-over-year in Q3, and most AI bull market corrections have been short-lived. Todd Sohn of Baird Strategas advised diversification given heavy tech exposures.