Nasdaq rally hasn't stopped these tech stocks from flashing warning signs

No stock rally is perfect, as is the case with the one seen this week in the tech-heavy Nasdaq Composite (^IXIC). In fact, there are some downright bearish signals that warrant a good think from the AI-focused bulls.

The closely watched Philadelphia Semiconductor Index (^SOX) is still down 14% from its June highs, and only three names in the index are closer to their highs than the SOX itself, according to BTIG tech strategist Jonathan Krinsky. Those names are AMD (AMD), Nvidia (NVDA), and Taiwan Semiconductor (TSM).

What’s more, 10 of the 30 names in the SOX are still off more than 30% from their 52-week highs. GlobalFoundries (GFS), KLA (KLAC), and On Semiconductor (ON) are the worst here, each down by more than 40%. The average SOX member is down 26%.

“We saw a similar situation back in 2000 after the initial crack [in markets], as many semi names went on to make new highs while the SOX itself didn’t,” Krinsky warned. “We are also seeing dispersion in the S&P 500: five straight days of more 52 week lows than highs even as the index has rallied back near all-time highs, with SPX +1.2% over the last month while 9 of 11 sectors are negative.”

This is underneath the surface of the Nasdaq Composite index surging to back-to-back record highs this week.

The historic run-up has been ignited by massive consumer and enterprise adoption of Meta’s (META) new autonomous AI agent, Muse, which validated heavy capital expenditures and sparked a broader rerating across the entire AI ecosystem.

Semiconductor titans amplified the advance, propelled by a multiday winning streak that pushed chipmaker AMD past a historic $1 trillion market valuation.

“It’s hard to fight tech momentum right now, but we also can’t ignore the extreme dispersion and increasing number of stats that rhyme with 2000. For the near-term this likely means more chop, but we remain cautious over the medium-term,” Krinsky added.

Brian Sozzi is Yahoo Finance’s Executive Editor, host of the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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