---
title: "Tech stocks recorded their worst week in a year. Why did the AI boom suddenly lose momentum?"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/291015012.md"
description: "Affected by doubts about AI investment returns, U.S. tech stocks have faced a sell-off. The NASDAQ index fell 4.6% in a single week, marking the largest weekly decline since June of last year; the S&P 500 dropped 2%. The market capitalization of the seven major tech giants evaporated by nearly $2.8 trillion, with memory chip and cloud service providers also declining. Market focus is shifting from the giants to the upstream semiconductor supply chain, as surging memory demand has led to rising costs, raising concerns about the profitability of tech stocks"
datetime: "2026-06-26T23:20:03.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/291015012.md)
  - [en](https://longbridge.com/en/news/291015012.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/291015012.md)
---

# Tech stocks recorded their worst week in a year. Why did the AI boom suddenly lose momentum?

According to a report by MarketWatch, the U.S. stock market has rarely seen a performance like this week since the beginning of the year. The NASDAQ Composite Index and the S&P 500 Index both declined throughout the week. As investors increasingly question whether the massive investments in AI by tech companies will yield corresponding returns, memory chip stocks and the "seven giants" of technology were sold off simultaneously.

The NASDAQ fell 4.6% this week, marking the largest weekly decline since June 5 of last year, while the S&P 500 dropped 2%. This further exacerbated the already sluggish performance of tech stocks in June. According to Dow Jones market data, the NASDAQ has accumulated a decline of about 6.2% in June so far, potentially setting the record for the largest monthly drop since March 2025.

The seven giants that have led the U.S. stock market to repeatedly hit new highs in recent years have seen their combined market value evaporate by nearly $2.8 trillion this month. If the situation does not change before the end of the month, it will set a record for the largest monthly market value shrinkage.

This wave of selling pressure is not limited to a few individual stocks but is sweeping across the entire tech industry. From memory chip maker Micron (MU-US), SanDisk (SNDK-US), to semiconductor companies and major cloud service providers, almost no one is spared.

Memory stocks, which were previously more affected by their own economic cycles, are now rising and falling in sync with major cloud providers. Large tech stocks, once seen as safe havens for capital, are also unable to escape this correction.

Brian Mulberry, a strategist at Zacks Investment Management, stated, "The key is that memory demand surged almost overnight, which drove rapid growth for memory companies, but the insufficient supply also pushed prices higher. This means that the costs for the seven giants of technology are rising again, and the market has already begun to worry about their future profitability."

Market participants point out that the driving forces behind the AI market are changing. David Keller, president and strategist at Sierra Alpha Research, noted that compared to the early stages of the AI market, which were dominated by the seven giants, investors are now beginning to shift their funds toward companies further upstream in the semiconductor supply chain The supply of memory chips is tight, giving companies like Micron unprecedented pricing power. As memory prices continue to rise, major cloud service providers have raised their capital expenditure forecasts, and Apple (AAPL-US) announced price increases for some products earlier this week due to rising component costs.

It is quite reasonable for investors to become more conservative now. Over the past few years, the valuations of AI concept stocks have risen significantly, primarily based on market expectations for future growth rather than actual profits.

The market is willing to assign higher valuations to companies because it believes that AI will bring enormous business opportunities, even if the current profits of these companies do not reflect the scale of their investments. However, the recent shift of market funds towards memory and other semiconductor sectors also indicates that the market's leading logic is increasingly based on whether "supply-demand imbalances can continue."

Keller pointed out that Micron's current strong performance is essentially a bet that the memory supply bottleneck will "last indefinitely," and he does not believe this is the most likely scenario.

On the other hand, software stocks remain relatively weak under the AI boom. Investors are concerned that AI may change or even replace the business models of some software companies, causing stocks like Salesforce (CRM-US), ServiceNow (NOW-US), and Palantir (PLTR-US) to continue their downward trend in recent weeks.

In May of this year, when semiconductor stocks cooled off, software stocks saw a brief rebound, indicating that the market at that time viewed the two sectors as a trade-off in allocation choices. However, now the entire technology industry seems to be facing indiscriminate selling pressure.

Even with Micron delivering far better-than-expected financial results, it has not been able to drive a rebound in overall tech stocks. Charlie McElligott, Nomura's cross-asset strategy general manager, stated, "Currently, the U.S. stock market is caught in a self-consuming cycle, and without the participation of the seven giants, the market can hardly reach new highs."

He noted that since the end of May, the stock prices of ultra-large cloud service providers have collectively fallen by 16.4%, becoming a significant factor dragging down the overall U.S. stock market

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