AI momentum stocks tumble as earnings season shakes the tech sector

Investing.com - A selloff in Asian technology shares gathered pace on Thursday, following sharp losses in SpaceX and Advanced Micro Devices that renewed skepticism over the sustainability of returns from the AI investment boom.

Losses extended into the U.S. premarket session on Thursday with Sandisk plunging nearly 9% despite forecasting first-quarter revenue above the Wall Street consensus of $10.47 billion.

Similarly, Western Digital fell even harder, sliding more than 13% in premarket despite its own above-consensus guidance for sales. Memory maker peer Micron saw its shares pull back 3.8%.

The selloff is a textbook "sell the news" reaction for two stocks that had become among the market’s most extreme momentum plays. Sandisk had surged roughly 469% year-to-date ahead of Thursday’s open, while Western Digital had rallied approximately 201% over the same stretch.

For context, the Nasdaq Composite had gained about 13.4% year-to-date — making both stocks poster children for the valuation dispersion that has made this earnings season so treacherous for high-multiple tech names.

Sandisk was spun off from Western Digital in 2025 and quickly became a closely watched AI momentum play, riding surging NAND flash demand from data-center buildouts.

Software stocks were also under pressure ahead of Thursday’s open, following earnings-triggered selloffs in sector peer HubSpot. Salesforce slipped 4.6%, ServiceNow fell 2.7%, Adobe slid 2.6%, and Intuit dropped 2% in premarket trading.

Asia leads the way

The premarket rout extends a broader wave of selling that swept through Asian markets earlier Thursday. South Korea’s KOSPI closed down 4.6% at 6,296.38, erasing much of the roughly 5% gain from the prior two sessions. The index fell as much as 5.5% intraday before recovering slightly.

Samsung Electronics dropped 6.3% and SK Hynix lost 10.4% in Seoul trading, a particularly painful combination given that the two chipmakers together account for more than half of the KOSPI’s index weighting. The South Korean won, meanwhile, strengthened to a 10-month high against the dollar.

The Asian selloff followed sharp overnight losses in U.S.-listed SpaceX and chipmaker Advanced Micro Devices, which revived investor doubts about the sustainability of returns on aggressive AI capital expenditure — a recurring anxiety this earnings season.

Jefferies analysts noted that Japan’s stock market had already seen a sharp reversal of momentum trades in July 2026, with high-beta stocks declining 17.5%, suggesting the AI unwind in Asia reflects a broader regional pattern rather than a Korea-specific event.

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