Key Takeaways:
Eleven US AI concept stocks that surged as much as 858% in the first half of 2026 have now lost 52% in July alone.
Eleven US AI concept stocks that surged as much as 858% in the first half of 2026 have now lost 52% in July, as profit-taking swept through storage and optical communication sectors.
The selloff has been most severe in chip and memory stocks, which are "bearing the brunt" of the global AI stock correction, according to the Financial Times. The drawdown was partly triggered by reports that a Chinese company had begun manufacturing a key piece of chip equipment for the first time, the Information reported.
SanDisk, the memory and storage company, led the decline with a 51.79% drawdown in July after surging 857.8% in the first six months of the year. The broader group of 11 AI concept stocks have all experienced significant corrections from their June peaks, with storage and optical communication names hit hardest. The selloff marks a sharp reversal for a cohort that had been the best-performing segment of the US equity market in the first half.
The correction has left investors who rotated into AI names in late June — after missing the first-half rally — absorbing the steepest losses. Hedge funds, which have been heavily positioned in AI-related trades and are on track for another strong year according to market reports, may face pressure if the selloff deepens. Further downside could trigger additional forced liquidation in the weeks ahead.
The drawdown follows a first half in which AI-related stocks delivered some of the largest gains in the US market. Storage and optical communication sectors saw valuations expand rapidly as investors priced in AI-driven demand for data center infrastructure and high-bandwidth memory, pushing some names to levels that analysts later described as unsustainable.
The selloff has been broad-based across the 11-name group, with all names participating in the decline. The concentration of losses in a single month — rather than a gradual decline — suggests coordinated institutional profit-taking rather than a slow reallocation.
The broader AI stock sell-off has extended beyond these 11 names, with the technology sector broadly under pressure in July. The rotation out of AI winners has been one of the dominant themes in US equity markets this month, as investors reassess valuations after the first-half surge. The US 10-year Treasury yield has also moved during this period, adding to the pressure on growth stocks that are more sensitive to discount rate changes.
This article is for informational purposes only and does not constitute investment advice.
