The U.S. tech rally has hit a series of speed bumps over the past month, pushing the Nasdaq Composite more than halfway toward correction territory as chip stocks stumble, recent listings give back gains, and investors continue to question the pace of artificial intelligence spending in the second half of the year.
Chip stocks, in fact, slumped into bear market territory on Friday, with the PHLX Semiconductor Index falling more than 20% from its June 22 record high in a reversal that took fewer than 20 trading days.
The Nasdaq, meanwhile, is down more than 5% from its early June record high and is on pace for its first weekly decline in three weeks, while the S&P 500 slipped into negative territory for the month of July.
Bank of America's Vivek Arya, a senior semiconductor analyst, is still holding firm on the tech sector, however, and sees the current slide as one of the nine drawdowns of 10% or more in the PHLX Semiconductor Index since the launch of OpenAI's ChatGPT in November 2022.
"We see correction as a summer reset, not a fundamental reversal," he and his team wrote on Friday, citing Nvidia and Broadcom in AI compute, Micron Technology in memory, and Marvell Technology in networking.
He also expects AI hyperscaler spending to more than double from this year's estimated $750 billion to around $1.7 trillion by 2030.
The weakness extends beyond established chipmakers. Many of this year's high-profile, largely tech-focused listings have also struggled after coming to market.
SpaceX, which priced at $150 a share on June 12, was last marked 5.6% lower on the session at $122 each, a move that has erased more than $780 billion from its peak market value of June 19.
Cerebras Systems, the AI chipmaker that went public on May 14, is trading at $172 a share, about 7% below the IPO price that valued the group at around $40 billion.
Smaller listings have also struggled.
Quantinuum, the Honeywell-backed quantum computing company that listed on June 4 at $60 a share, valuing the company at $15.7 billion, was last trading at $56.22. Clean power provider Fervo Energy, which went public on May 12 at $27 a share, was last marked at $23.80.
The only major listing holding north of its first-day price, in fact, is the American Depositary Receipts (ADRs) of South Korean chipmaker SK Hynix, although the $26.5 billion sale briefly traded south of its $149 offering level on Friday, before rising to around $154 each by midday.
Some investors, however, note that the ADRs still trade at roughly a 25% premium to the stock's main listing on South Korea's Kospi index, which has fallen more than 25% over the past month and was closed for the nation's Constitution Day celebrations on Friday.
Ruben Dalfovo, an investment strategist at Denmark-based Saxo Bank, argues investors are beginning to ask how much future AI growth is already reflected in share prices.
"Expectations eat earnings for breakfast," he wrote Friday, noting the balance that semiconductor stocks, and the broader tech complex that relies on capital spending, need to constantly navigate. "Too little investment can leave valuable demand unmet; too much can eventually create excess supply, lower prices and weaker profits."
"The market is simply asking a more demanding question," he added. "Not whether the future is bright, but how much investors have already paid to see it."
With Canadian wildfire smoke clouding skies across the eastern U.S. this week, investors are finding that visibility is definitely trading at a premium.
Write to Martin Baccardax at martin.baccardax@barrons.com
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(END) Dow Jones Newswires
July 17, 2026 13:27 ET (17:27 GMT)
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