As semiconductor stocks undergo another bout of severe volatility, Bank of America Global Research has issued a sharp rebuke to prevailing market sentiment, labeling fears driving the current tech-sector selloff as logically impossible. In a note released Tuesday, analysts argued that investors are currently pricing in what Fortune’s Jim Edwards called a “free fall” based on beliefs that BofA considers “internally inconsistent.”
BofA senior analyst Vivek Arya’s team put together the note that recalled the famous John Maynard Keynes quote that markets can remain irrational longer than investors can remain solvent, “yet we believe recent software-led moves weighing on leading AI chip stocks appear internally inconsistent.”
The market appears to be reacting, as Edwards noted, to Palantir CEO Alex Karp’s typically outspoken argument on a Monday night earnings call. AI is now so good at writing and managing enterprise software that many software-as-a-service (SaaS) companies risk becoming irrelevant. The ensuing selloff wiped out $300 billion in market cap, with Microsoft, Salesforce, and ServiceNow taking significant hits.
Jason Lemkin, the so-called godfather of SaaS, wrote on his blog that early 2026 was seeing a “crash” in SaaS stocks, while BofA’s Arya described it as an “indiscriminate selloff” that resembles the reaction to China’s DeepSeek in January 2025. That moment proved an “overblown selloff,” and this moment just doesn’t make logical sense, Arya argued.
