Semiconductor stocks fell in premarket trading on Wednesday, putting the brakes on a nascent rebound that had been building over the past few sessions.

Intel stock led the declines, falling 2.7%, while Advanced Micro Devices and Nvidia stocks inched down 1.8% and 0.9%, respectively. Memory names Micron and SanDisk dropped 1.8% and 2.3%, respectively.

The iShares Semiconductor ETF (SOXX) fell 2%, reversing gains from the previous two sessions. The fund, which serves as a benchmark for the chip sector, had surged 5.5% on Tuesday – its biggest one-day gain in more than a month – after edging up 0.4% on Monday.

Tech Rotation, China AI Risks

The volatility has perplexed investors, particularly as the tech earnings season is set to begin later today with Alphabet’s results, followed by Intel’s on Thursday.

Since the start of July, investors have booked profits and rotated funds into Big Tech and software names. Chip stocks had also been under pressure lately from the low-cost Chinese AI models.

Last week, China’s Moonshot AI released Kimi K3, an open-source model that its maker claims matches leading closed U.S. models despite being developed with far fewer financial and computing resources.

The launch reignited debate over whether rival AI developers are overspending on infrastructure, and whether the success of more compute-efficient models could curb demand for the high-end chips powering companies such as Anthropic and OpenAI.

On Stocktwits, the retail sentiment for INTC and MU shifted to ‘neutral’ from ‘bullish,’ while the sentiment for AMD and SOXX remained ‘neutral.’

Intel’s Results On Thursday

Investors would now turn to Intel’s results, scheduled for post-market hours on Thursday.

Analysts expect the government-backed chipmaker’s second-quarter revenue to rise 12% to $14.45 billion and adjusted income of $0.22 per share compared to a loss of $0.10 per share last year, according to data from Koyfin.

Currently, 13 out of 48 analysts rate the stock ‘Buy’ or higher, 32 rate it ‘Hold,’ and three rate it ‘Sell’ or ‘lower,’ per Koyfin. Their average price target of $107.15 implies a mere 1.6% from the stock’s last close.