Stocks wavered this week as the recent run in artificial-intelligence-linked megacaps cooled, dragging broader market measures lower and prompting fresh warnings from technical analysts. The market was off roughly 1.6% for the week as Amazon fell about 5%, Alphabet slid more than 3%, Meta declined nearly 3% and Microsoft slipped nearly 2%.

"Katie Stockton of Fairlead Strategies described the group as 'extremely overextended,'" said a CNBC segment that highlighted the uneven rally. Stockton urged investors to consider taking profits, saying it was "perhaps time to take some profits off the table as breadth deteriorates," a warning that underscores a growing divide between a handful of outsized winners and the rest of the market.

The slump followed a stretch in which tech leaders had powered much of the gains. Year-to-date, Nvidia has climbed and month-to-date added roughly 3%, while Alphabet has rallied more than 15% and Apple has surged over 8%. That concentration means market-cap-weighted benchmarks can remain elevated even as a majority of stocks lag, magnifying downside when the leaders falter.

The recent action also reflects sensitivity to monetary policy. Earlier dovish language from central bank officials sparked a rally in rate-sensitive assets — from technology names to small caps — as traders priced in a slower path of rate hikes. That pivot buoyed cyclical assets and extended the appetite for higher-valuation growth stocks, but Stockton and other technicians argue that the gains left some names vulnerable to correction.

Not all tech names are without appeal. Stockton flagged Intel as a potential performer, citing fresh M&A or capital partnership headlines. Intel surged about 7% on Thursday after Bloomberg reported the chipmaker had approached Apple about a possible investment; the stock is already up more than 66% this year. Stockton sees "further upside" in select names where price action and fundamentals appear to support continued gains, even as the AI cohort cools.

Market participants are watching breadth metrics and seasonal patterns closely. Historically, the stretch between now and mid-October has been a period of increased vulnerability for stocks, a seasonal backdrop that adds weight to Stockton's caution. The practical implication: even modest weakness among the largest cap AI names can amplify declines in indexes given their outsized weights, while a broader rotation could pressure smaller and mid-cap stocks that had lagged.

For portfolio managers and individual investors, the moment highlights a familiar trade-off: participate in a concentrated rally or pare exposure to lock in gains. "When a handful of names drive returns, the risk of a sharper drawdown rises if those names stumble," said an industry strategist commenting on the CNBC coverage.

As traders digest mixed signals from technical indicators and policymakers, the coming sessions will test whether the recent pullback is a healthy consolidation or the start of a wider correction. For now, the market's direction appears to hinge on the same narrow cohort of AI leaders whose performance has come to define the rally.