Esteemed finance professor Jeremy Siegel called Friday’s sell-off in the technology sector a common reaction to a parabolic rise in stock prices. But he was also optimistic that such a pullback usually doesn’t signal the beginning of a prolonged correction. “One of the oldest sayings in Wall Street is up the staircase, down the elevator, and that’s exactly what happened,” Siegel, professor emeritus of finance at University of Pennsylvania’s Wharton School of Business and WisdomTree chief economist, said on CNBC’s ” Closing Bell ” on Friday afternoon. “When you have these super moves like we’ve seen in the chip stocks, the memory stocks, the trend followers, the momentum players … whenever it goes off the trend, they’re out because they’re just riding that train, and that’s what we see today,” he said. All three major averages logged losses this week , with Nasdaq’s 4.7% decline, its worst weekly showing since April 4, 2025. Still, even with this pullback, the Nasdaq has tallied a 10.6% gain in 2026. As Siegel mentioned, semiconductor stocks have been a big winner this year, with the VanEck Semiconductor ETF (SMH) rising 58% year to date, but it suffered a nearly 5% drop this week. Friday’s 9.2% drop was its worst one-day move since Jan. 27, 2025. The iShares Semiconductor ETF (SOXX) on Friday saw its worst day since March 16, 2020. Year to date, SOXX is up more than 79%. But Siegel said such big moves aren’t out of the ordinary. “Now, that’s rarely the top,” he said. “It could be the top, but usually it’s a very short-term top. Goes down and then tries to build up, and that’s the point where you kind of break the previous high. If it doesn’t, then that could be a start of a more major downturn, but this is a very, very common reaction to … the parabolic move.” According to Siegel, the market’s artificial intelligence-driven gains are different from previous market bubbles because of the potential productivity growth these technological changes could create. The professor likened these possible societal impacts to the Industrial Revolution. “Again, we all emphasize that this is a very different situation, and this AI revolution and the ‘Mag Seven’ is a situation we just never have seen before,” he said. The catalyst for the chip sell-off on Friday was unclear. Sentiment had soured after Broadcom didn’t raise its AI chip forecast Wednesday, but the intensity of Friday’s selling was worse than what occurred in the immediate wake of that news. Siegel also cautioned that these parabolic price rises only make sense if companies can also permanently keep their earnings inflated. “Remember, you can only double your price if your earnings stay up, doubled forever. If this is a three- or four-year burst, and then they go back down, you way overplayed your hands here in these chip stocks,” he said. “Be careful about temporary surges in profitability … chips historically have cyclicality.”
