Netflix (NFLX) fell to a 52-week low after issuing a weaker-than-expected earnings forecast. In parallel, last month’s market darling SpaceX (SPCX) slid well below its IPO price as its first flight after the debut was canceled due to technical issues. These unconnected developments both added to the broad tech sector pressures, which primed investors for negativity – and one blue chip stock massively strengthened the bad vibes. IBM’s (IBM) worst drop in its history – down 25% in a single session – erased more than $400 billion from nearly 150,000 401(k) accounts. The preliminary revenue miss that triggered The Big Blue’s historic drop reflected a shift in technology budgets away from enterprise software and toward AI hardware.
And yet, the hardware and infrastructure side of the tech sector also suffered badly, as chip stocks saw one of their worst weeks in years. The iShares Semiconductor ETF (SOXX) declined 9.3%, while Roundhill Memory ETF (DRAM) dropped by over 15%. As usual in times of market stress, investors brushed off the good news, focusing on risks and concerns. Thus, Taiwan Semiconductor Manufacturing, aka TSMC (TSM) – the global AI chip foundry – reported record results and boosted guidance on soaring demand for advanced AI chips, but saw a sell-off anyway as investors fretted over a raised capex budget.
