The recent AI sell off... nothing to see here

There are a couple of pretty strong reasons why you shouldn't be alarmed just quite yet about the recent sell off in Artificial Intelligence (AI) stocks.

The first, is that I believe we are still poised for higher prices in 2025, and everything is currently going to plan when I assess the market against my 2025 Road Map. Once again, I encourage those of you to re-read page 19 of that report, as that will give you a pretty good clue as to when the break-out will occur in equity prices this year.

Another very strong reason is that the recent sell off in AI stocks hasn't even approached the same magnitude as the sell off that occurred as recently as June last year.

The chart below takes NVIDIA as our example, as it is most often cited as the benchmark to measure the AI space. Notice how the move down back in June saw the stock decline $50.07 (or 35.6%). To repeat this move would bring the share price back down to $103.60 - and we are still a little way off that at the moment. Price support at $105.22 would give us the Fibonacci retracement at 61.8% between the April 2024 low and the recent all time high. For me, this suggests that $103 - $105 represents a reasonable place to see price support and certainly not a reason to panic just quite yet.

From a more macro perspective, another way to play this sector is via the Global Semiconductor ETFs. There are a number listed on international markets, including one on the ASX in Australia. There is a pretty obvious set-up in that index should it trade back toward the $13.37 level. I wouldn't be panicking on the sector unless those levels were broken.

So, what does this all mean?

Well, for me it's not a time to panic just yet. Save the panic for when the AI robots begin taking over the world (a'la Terminator 2 and Skynet).

For those who believe that AI is here to stay, then there are some obvious levels that could represent price support over the longer term... "if" (and that is a big "IF") prices get there.

Let me know your thoughts in the comment section, or feel free to Minnect with me if you want to go into a bit more detail one-on-one on a particular ETF or stock chart.

Until next time...