Investors are choosing to sell off technology stocks, which had been among the market's strongest performers in recent months, as they brace for a prolonged conflict in the Middle East. Shares of memory chip maker Micron Technology (MU.US) closed down 9.9% on Monday and fell further in after-hours trading. Among its peers, Samsung Electronics saw its stock drop nearly 5%, while SK Hynix fell as much as 7.7% during early trading on Tuesday on the Korea Exchange. Uncertainty over whether a potential war involving the US, Israel, and Iran could be resolved through peace talks is unsettling global markets, with signs of capitulation increasing. After years of AI-driven gains, technology stocks are now recording their sharpest declines. Andrew Jackson, an analyst at Ortus Advisors, wrote, "As the quarter-end approaches, investors are fleeing recent winners," adding, "It would take some extremely significant positive news to potentially reverse the decline today." The Bloomberg Semiconductor Stock Index has fallen more than 13% in March, on track for its worst monthly performance in three and a half years. Despite this, the index is still poised to end the quarter with a 10% gain. Concerns over potential disruptions to oil supplies due to conflict involving Iran have led investors to shift toward more defensive stocks. Following a blistering rally, the AI trade appears particularly vulnerable, given additional worries over high spending levels and valuations. "Sentiment is shifting away from the AI space," said Gerald Gan, Chief Investment Officer at Reed Capital Partners, in an interview on Monday. "I would consider taking more profits rather than adding to positions."
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