Billions Exit Tech as AI Hype Subsides, Zscaler Underperforms Peers
U.S. technology stocks saw a fourth consecutive weekly decline as investors pulled back from AI-driven names, with Zscaler shares down 2.3% versus a 1.7% sector slide. Strategists point to a rotation into defensive industries after heavy profit-taking on high-valuation cloud-security stocks.
1. Sector Outflows Intensify
Last week, U.S. technology sector ETFs recorded approximately $4.8 billion in net outflows—the largest weekly redemptions since October 2025—as investors rotated away from high-flying AI-related equities.
2. Zscaler Stock Reaction
Shares of Zscaler declined 2.3% over the same period, underperforming the Nasdaq 100’s 1.7% retreat, as profit-taking hit cloud-security providers with premium valuations.
3. Rotation Implications
Market analysts report that funds are reallocating into consumer staples and energy sectors, seeking stable cash flows and defensive positioning after the recent surge in AI-focused growth stocks.