Bears Pile Into Chips as AI Spending Spooked Market

Options traders turned sharply negative on the semiconductor sector this week. Fears over AI capital spending have rattled megacap tech, and the put-heavy flow in chips is the clearest sign yet of how far sentiment has shifted.

GOOGL was at the centre of the sell-off. Alphabet admitted its "AI mode" hurt traditional search. Sales and profits missed expectations. Negative options bets on the stock ranked among the heaviest across US equities this week, with buyers of downside protection piling in across near-term November expiries.

NVDA tells a similar story. The stock carries an RSI of just 35, deep in oversold territory. Its negative options flow for the seven-day period sat alongside AMD and MU as the heaviest in the information technology sector. All three have dense option expiry clusters in the November 6 to November 20 window, a period that coincides with the MSCI World November review announcement on 11 November.

INTC stands out too. Its RSI has fallen to 25, the lowest reading in the sector. Negative option bets ranked third among tech names this week.

The most acute stress sits in smaller names. WOLF carries a short score of 78 and a days-to-cover of 9.6. Options activity on the stock leans decisively bearish. Bears are also circling TLN, which faces a Russell 2000 deletion probability that jumped overnight to 90%, with ORTEX Index Rebalance Radar flagging $901 million of forced selling.

One counter-signal worth watching: RKT holds the highest ORTEX options score among US names this week, suggesting traders see a bounce despite the stock being down 34% year-to-date.