--- title: "US chip stocks plummet, can defensive stocks take over?" type: "News" locale: "en" url: "https://longbridge.com/en/news/294173010.md" description: "On July 28th, U.S. stocks closed with significant declines in chip and AI concept stocks, as funds rotated into defensive sectors such as consumer staples and healthcare. Companies like Micron and AMD saw notable drops, while stable profit firms like Coca-Cola and Pfizer strengthened. Investors reduced exposure to overvalued AI hardware, increasing allocation to companies with stable cash flows and less sensitivity to economic cycles, reflecting a decrease in risk appetite and a pursuit of certainty in profits" datetime: "2026-07-29T08:14:23.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294173010.md) - [en](https://longbridge.com/en/news/294173010.md) - [zh-HK](https://longbridge.com/zh-HK/news/294173010.md) --- # US chip stocks plummet, can defensive stocks take over? **On July 28, U.S. stocks closed with chip and artificial intelligence (AI) concept stocks continuing to decline significantly. The Dow Jones Industrial Average rose by 1.03%, the S&P 500 index increased by 0.21%, while the tech-heavy Nasdaq Composite Index fell by 0.22%. Behind the seemingly stable indices, a significant rotation has occurred, with funds shifting from the overvalued AI industry chain to consumer staples, industrials, and other low-volatility core assets.** According to the Associated Press, Micron Technology fell by 8.9% that day, Advanced Micro Devices (AMD) dropped by 8.1%, and SanDisk plummeted by 14.25%. In contrast, traditional companies with stable earnings, such as Coca-Cola, showed significant strength, with Coca-Cola rising by 5.0%, paint company Sherwin-Williams increasing by 8.3%, and manufacturing company Illinois Tool Works rising by 3.6%. The Russell 2000 index, representing small-cap stocks, also rose by 0.2%, the Consumer Staples ETF (XLP) increased by about 2.0%, and the Healthcare ETF (XLV) rose by about 2.4%; Eli Lilly rose by about 1.93%, Pfizer increased by about 2.35%, and Johnson & Johnson slightly rose by about 0.29%, highlighting the value of defensive stocks. Investors are reducing their exposure to high-valuation, crowded AI hardware companies while increasing allocations to companies with predictable earnings, stable cash flows, and demand less affected by economic cycles. Coca-Cola is a typical representative of this change. According to the latest financial report, Coca-Cola's second-quarter revenue grew by 7% year-on-year, outperforming market expectations. Even though management still describes the current consumer environment as "dynamically changing," beverage demand remains relatively stable, and its global brand, channel network, and pricing power allow it to maintain revenue and profits, making it a long-term defensive stock in the eyes of the market. In terms of stock price, Coca-Cola has risen by about 27% this year, outperforming the seven giants of U.S. stocks and beating its main competitor PepsiCo. However, Coca-Cola's rise that day was not solely based on the "safe-haven" label. Its stock performance also reflects a repricing due to better-than-expected earnings. In other words, investors are buying not just for low volatility but also for higher certainty in earnings. It is noteworthy that the strength of defensive stocks is both a result of decreased risk appetite and a potential indication of an expanded range of U.S. stock gains. If consumer staples, healthcare, utilities, and high-quality industrial companies can continue to rise based on earnings growth, the market's reliance on a few AI leaders will decrease, and the bull market structure may become more balanced. Jonathan Krinsky, chief market technician at U.S. financial firm BTIG, warned that the recent gains in healthcare, real estate (core stocks), and insurance sectors could quickly reverse, attributing the rise in defensive sectors to the unwinding of positions in tech stocks and AI trades rather than a fundamental shift John Higgins, a consultant at Capital Economics, expects that once market concerns ease, the AI trend may return to a positive trajectory. The upcoming market will face two key tests: first, Meta, Microsoft, and Amazon will successively release their earnings reports, and investors will assess whether chip demand can support current valuations by comparing their AI capital expenditures, cloud business growth, and free cash flow; second, the Federal Reserve will announce its interest rate decision at midnight on July 30th Beijing time. If energy and inflation risks rise again and long-term U.S. Treasury yields increase, high-valuation tech stocks may continue to face pressure, while the relative advantage of defensive sectors is expected to persist; if tech giants prove that their AI investments are rapidly converting into revenue, funds may also flow back in. More exclusive planning and expert columns in the stock channel, free to check\>\> ### Related Stocks - [MU.US](https://longbridge.com/en/quote/MU.US.md) - [PFE.US](https://longbridge.com/en/quote/PFE.US.md) - [KO.US](https://longbridge.com/en/quote/KO.US.md) - [AMD.US](https://longbridge.com/en/quote/AMD.US.md) - [KOF.US](https://longbridge.com/en/quote/KOF.US.md) - [CCEP.US](https://longbridge.com/en/quote/CCEP.US.md) - [AMDD.US](https://longbridge.com/en/quote/AMDD.US.md) - [MUD.US](https://longbridge.com/en/quote/MUD.US.md) - [AMUU.US](https://longbridge.com/en/quote/AMUU.US.md) - [MULL.US](https://longbridge.com/en/quote/MULL.US.md) - [AMDL.US](https://longbridge.com/en/quote/AMDL.US.md) - [IHE.US](https://longbridge.com/en/quote/IHE.US.md) - [IXJ.US](https://longbridge.com/en/quote/IXJ.US.md) - [XLP.US](https://longbridge.com/en/quote/XLP.US.md) - [XLV.US](https://longbridge.com/en/quote/XLV.US.md) - [SOXX.US](https://longbridge.com/en/quote/SOXX.US.md) - [FTXL.US](https://longbridge.com/en/quote/FTXL.US.md) - [MUU.US](https://longbridge.com/en/quote/MUU.US.md) - [VHT.US](https://longbridge.com/en/quote/VHT.US.md) - [UGE.US](https://longbridge.com/en/quote/UGE.US.md) - [FTXG.US](https://longbridge.com/en/quote/FTXG.US.md) - [XSD.US](https://longbridge.com/en/quote/XSD.US.md) - [SOXQ.US](https://longbridge.com/en/quote/SOXQ.US.md) - [VDC.US](https://longbridge.com/en/quote/VDC.US.md) - [MUYY.US](https://longbridge.com/en/quote/MUYY.US.md) - [MUZ.US](https://longbridge.com/en/quote/MUZ.US.md) - [USD.US](https://longbridge.com/en/quote/USD.US.md) - [SOXL.US](https://longbridge.com/en/quote/SOXL.US.md) - [SSG.US](https://longbridge.com/en/quote/SSG.US.md) - [SOXS.US](https://longbridge.com/en/quote/SOXS.US.md) - [AMDG.US](https://longbridge.com/en/quote/AMDG.US.md) - [DAMD.US](https://longbridge.com/en/quote/DAMD.US.md) - [AMDY.US](https://longbridge.com/en/quote/AMDY.US.md) - [AMDW.US](https://longbridge.com/en/quote/AMDW.US.md) - [SMH.US](https://longbridge.com/en/quote/SMH.US.md) - [PSI.US](https://longbridge.com/en/quote/PSI.US.md) - [.DJI.US](https://longbridge.com/en/quote/.DJI.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [.IXIC.US](https://longbridge.com/en/quote/.IXIC.US.md) - [SNDK.US](https://longbridge.com/en/quote/SNDK.US.md) - [SHW.US](https://longbridge.com/en/quote/SHW.US.md) - [ITW.US](https://longbridge.com/en/quote/ITW.US.md) - [LLY.US](https://longbridge.com/en/quote/LLY.US.md) - [JNJ.US](https://longbridge.com/en/quote/JNJ.US.md) - [PEP.US](https://longbridge.com/en/quote/PEP.US.md) - [META.US](https://longbridge.com/en/quote/META.US.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [AMZN.US](https://longbridge.com/en/quote/AMZN.US.md) ## Related News & Research - [CORZ Stock Alert: Core Scientific Strikes AI Infrastructure Deal With AMD](https://longbridge.com/en/news/294105050.md) - [Brutal Math of Leveraged AI Bets: Why Martin Shkreli Says Wall Street Will 'Send Micron to $5'](https://longbridge.com/en/news/294503299.md) - [Coca-Cola's Earnings Could Put $10.7 Billion In Market Value On The Line](https://longbridge.com/en/news/293971154.md) - [Powertech says it is on track to ship for AMD soon](https://longbridge.com/en/news/294091001.md) - [Coca-Cola's Consumption Trends Remain 'Best in Class,' Analyst Says](https://longbridge.com/en/news/294235099.md)