Tech stocks tumble again
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Illustration: Annelise Capossela/Axios
Another sharp selloff hit tech stocks Tuesday, with some AI-related shares posting double-digit losses shortly after noon ET.
Why it matters: Tech shares have been the engine of a stock market rally that has driven the S&P 500 up more than 75% over the last three years through last week.
Driving the news: Datacenter-centric stocks tumbled, without a clear catalyst.
- Shares of chip giants like AMD and Intel fell more than 8%.
- Optical networking stocks — which sell the fiberoptic cables and connections needed to stitch servers together within AI data centers — were down even more sharply, with Coherent and Lumentum off more than 10%.
- Server makers like Dell Technologies, Hewlett Packard Enterprise and Super Micro Computer were battered by losses of more than 7%, as were makers of memory products to manage the massive amounts of data produced and required by AI. Micron, Seagate Technology and Western Digital were all down more than 8%.
Between the lines: There's no clear cause for the wave of selling, though there are a number of suspects.
- President Trump warned that the U.S. would respond to Iran's downing of a U.S. Apache helicopter. But his announcement didn't rattle oil markets too much, and U.S. crude oil prices were down by more than 3%.
- Likewise, Apple's Worldwide Developers Conference Tuesday— once a major market-moving event — seems to have been a damp squib. Apple dropped 4%, but that's less than the decline in other tech stocks, making it an unlikely catalyst for the broad decline.
- Treasury yields aren't surging — as they did during the selloff on Friday.
The intrigue: One possible explanation could be that money managers and other investors are selling some big winners of the last year — Lumentum for example was up nearly 1,000% through the 12 months that ended yesterday — to raise cash to re-invest in the big tech IPOs that are on deck, foremost among them the giant SpaceX offering that is set to start trading Friday.
Yes, but: Or it may just be that the heavily overheated market that some of us have been warning about is getting a much-needed cooling off — and just maybe something a bit worse.
