BTIG warns: AI polarization has reached an "unsustainable" extreme, if the semiconductor sector collapses, the market will have no defense.

BTIG Chief Market Technical Strategist Jonathan Krinsky stated that the drastic fluctuations in artificial intelligence-related stocks are causing extreme market differentiation, which may be reaching unsustainable levels. In a report, Krinsky emphasized the stark contrast between winners and losers: CBRE Group, Inc. Class A (CBRE.US) saw its stock price plummet 24% from a historical high within two days, marking the largest weekly decline since the financial crisis; while data center CareTrust REIT Inc Equinix, Inc. (EQIX.US) surged 11% in a single trading day, achieving one of the best daily performances in nearly a decade. The BTIG strategist warned that although these fluctuations are still largely under the surface and have not significantly impacted major indexes, this situation may change quickly. "However, at some point, we begin to worry that weakness will overwhelm strength, and the market will become fragile," he said. Krinsky pointed out that the S&P 500 index is still struggling at the 7000 level, and the second half of February typically represents a weaker seasonal period. Given the misalignments at the individual stock level, the next few weeks may prove challenging. The software sector is an area of particular concern, according to the strategist. Krinsky further explained, "The software sector really needs to hold recent lows." He emphasized that although the sector saw a "capitulation sell-off" last week, breaking below recent lows would indicate a deeper downtrend brewing. Perhaps most crucially, the BTIG technical analyst warned that as other sectors experience turbulence, the semiconductor sector must continue to carry the load. "Given the significant declines in software stocks and other various stocks, the market really needs the semiconductor sector to continue to carry the load," he said. Krinsky cautioned that if the semiconductor sector weakens alongside other sectors, "the indexes are likely to have difficulty stabilizing." Software sector ETFs: INVESCO AI AND NEXT GEN SOFTWARE ETF (IGPT.US) SPDR S&P SOFTWARE & SERVICES ETF (XSW.US) ISHARES EXPANDED TECH-SOFTWARE SECTOR ETF (IGV.US) Cloud computing ETFs: FIRST TRUST CLOUD COMPUTING ETF (SKYY.US) WISDOMTREE CLOUD COMPUTING FUND (WCLD.US) GLOBAL X CLOUD COMPUTING ETF (CLOU.US) FIDELITY CLOUD COMPUTING ETF (FCLD.US) Semiconductor ETFs: VANECK SEMICONDUCTOR ETF (SMH.US) ISHARES SEMICONDUCTOR ETF (SOXX.US) DIREXION DAILY SEMICONDUCTORS BULL 3X SHARES (SOXL.US) ARTIFICIAL INTELLIGENCE/Siasun Robot&Automation Technology ETF: GLOBAL X ARTIFICIAL INTELLIGENCE & TECHNOLOGY ETF (AIQ.US) GLOBAL X ROBOTICS & ARTIFICIAL INTELLIGENCE ETF (BOTZ.US) ALPS DISRUPTIVE TECHNOLOGIES ETF (DTEC.US) WISDOMTREE ARTIFICIAL INTELLIGENCE AND INNOVATION ETF (WTAI.US) XTRACKERS ARTIFICIAL INTELLIGENCE & BIG DATA ETF (XAIX.US) WISDOMTREE ARTIFICIAL INTELLIGENCE UCITS ETF (WISE.US) GOLDMAN SACHS INNOVATIVE EQUITY ETF (GINN.US) FIRST TRUST NASDAQ ARTIFICIAL INTELLIGENCE AND ROBOTICS ETF (ROBT.US) TIAA-CREF QUANT TECH LEADERS ETF (TECB.US) ISHARES EXPONENTIAL TECHNOLOGIES ETF (XT.US) ROBO GLOBAL ARTIFICIAL INTELLIGENCE ETF (THNQ.US) ROUNDHILL GENERATIVE AI & TECHNOLOGY ETF (CHAT.US)