A brutal tech selloff swept across Wall Street in the trading week ending July 17, hammering semiconductor stocks after their record-breaking rally as investors rushed to take profits on growing fears that hyperscaler AI investment is losing momentum and low-cost Chinese AI models could erode pricing power.
By midday Friday, the technology sector had slumped 5.9% for the week, putting it on pace for its worst weekly performance since March 2025.
The iShares Semiconductor ETF, the go-to fund for the AI trade, had fallen 19% month to date, putting it on track for its worst monthly performance since November 2008.
The week’s standout slump belonged to IBM.
Shares plunged 25.2% on Tuesday, July 14 — the stock’s worst trading day on record, worse than Black Monday 1987 — after the company pre-announced second-quarter revenue of $17.2 billion, missing consensus by roughly $700 million. Adjusted EPS came in at $2.93 versus a $3.02 estimate.
CEO Arvind Krishna blamed a late-quarter budget shift, with clients redirecting spending toward AI hardware — memory chips, servers, storage — at the expense of IBM’s software and infrastructure.
Other major fallers included the high-flying memory names, with SanDisk and Western Digital both down more than 20% on the week.
The trigger came from Seoul: South Korean brokerage KIS, which published a second-quarter estimate for SK Hynix that was 8% below consensus, citing slower-than-expected HBM4 shipments.
The South Korean giant collapsed 15% in Asia on Monday, July 13, its worst day ever. The newly launched U.S. ADR closed its first week of trading in the red.
On the macro front, the news was actually positive.
Consumer inflation cooled in June from 4.2% to 3.5% year-over-year — the first decline of 2026. On a monthly basis, prices dropped 0.4%, the sharpest fall since April 2020.
Producer inflation also plunged sharply. The data reinforced market expectations that the Federal Reserve will hold rates steady at its July meeting.
More: 250th birthday present to markets: Jobs report eases rate hike fears
For a second straight month, University of Michigan Consumer Sentiment jumped 10%, reaching its highest level since February on easing gas prices.
Year-ahead inflation expectations ticked down from 4.6% to 4.2%; long-run expectations held at 3.3%.
Director Joanne Hsu cautioned the recovery may prove fragile: Over 70% of interviews were conducted before U.S. strikes on Iran resumed on July 7 and gas prices began climbing again.
Benzinga is a financial news and data company headquartered in Detroit.
This article originally appeared on Detroit Free Press: AI selloff hits Wall Street despite good inflation news
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