What Happened?
A number of stocks fell in the afternoon session after investors trimmed chip exposure to reduce portfolio risk ahead of Nvidia's highly anticipated earnings report.
Semiconductor shares experienced widespread selling pressure as traders locked in profits ahead of Nvidia's second-quarter fiscal 2027 financial release. As the dominant player in artificial intelligence processors, Nvidia's earnings and forward guidance set the standard for the broader technology hardware industry. Major chipmakers, including Intel, Advanced Micro Devices, and Taiwan Semiconductor Manufacturing Company, recorded declines ranging from 3% to 5%.
Market participants frequently de-risk into high-variance catalysts, especially following significant year-to-date gains in large-cap semiconductor stocks. Caution was further compounded by reports from Bloomberg of potential price increases exceeding 15% on servers equipped with AI chips, prompting investors to adopt a defensive stance across the supply chain.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Memory Semiconductors company Micron (NASDAQ: MU) fell 5.5%. Is now the time to buy Micron? Access our full analysis report here, it’s free.
- Memory Semiconductors company Seagate (NASDAQ: STX) fell 5.7%. Is now the time to buy Seagate? Access our full analysis report here, it’s free.
- Memory Semiconductors company Western Digital (NASDAQ: WDC) fell 5.5%. Is now the time to buy Western Digital? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Semtech (NASDAQ: SMTC) fell 3.9%. Is now the time to buy Semtech? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Penguin Solutions (NASDAQ: PENG) fell 3.2%. Is now the time to buy Penguin Solutions? Access our full analysis report here, it’s free.
Zooming In On Seagate (STX)
Seagate’s shares are extremely volatile and have had 64 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 9.2% on the news that the 30-year U.S. Treasury yield hit a 19-year high and oil stayed elevated as a window for a U.S.–Iran deal closed without a breakthrough, a CNBC report revealed. Deutsche Bank’s Jim Reid wrote in a note (reported by CNBC) that “with little sign of a U.S.–Iran deal, investors priced in a more extended closure of the Strait of Hormuz and a longer stretch of higher oil.” That is a problem for chip stocks twice over: it lifts the discount rate applied to future earnings, and it raises the cost of financing the same data-center buildout those earnings depend on. Carl Weinberg, founder of High Frequency Economics, told CNBC’s “Squawk Box Europe” that AI infrastructure borrowing is competing with governments for the same pool of savings and helping push bond yields higher, a loop that then feeds back into lower chip valuations.
Seagate is up 178% since the beginning of the year, but at $800.31 per share, it is still trading 19.5% below its 52-week high of $994.79 from August 2026. Investors who bought $1,000 worth of Seagate’s shares 5 years ago would now be looking at an investment worth $9,298.
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