By Benjamin Pimentel

An early tech rally fizzled as the sector sank into the red Thursday on losses in shares of Electronic Arts and Advanced Micro Devices.

After posting gains at the opening bell, the Nasdaq Composite Index (RIXF) lost 1.1% to close at 2,108. The tech-heavy benchmark was also down 1.2% for the week.

AMD (AMD) led the retreat, its shares down about 6%. Electronic Arts (ERTS) also fell 2.7%. On Wednesday, Electronic Arts shares jumped on rumors of a possible buyout by Microsoft, but the software giant later denied the report. Microsoft was up about 1% Thursday morning.

The sector got a boost from shares of Red Hat Inc. (RHT) which soared 12.3% after the software maker reported a jump in quarterly profit and scored an upgrade from Bank of America-Merrill Lynch. Bank of America raised its rating for the company to buy, citing the firm's strengths during a slump in corporate spending in information technology.

"Red Hat, as a low cost alternative, is taking wallet share of tight IT spending," analyst Kash Rangan said in a note.

After gaining early in the session, National Semiconductor (NSM) was down 0.9%. On Thursday, Citigroup upgraded the chip maker to buy, saying investors were underestimating the company's strengths.

The Morgan Stanley High Tech 35 Index (MSH) was down 1.4%, while the Philadelphia Semiconductor Index (SOX) was behind 2.4%.

Also in the red were Google Inc. (GOOG), Apple Inc. (AAPL) and Yahoo Inc. (YHOO).