Wall Street saw a split session on Thursday as chip stocks rallied while some of the biggest tech names stumbled. The Dow Jones Industrial Average climbed about 1%, helped by strong gains in semiconductor shares, even as the tech-heavy Nasdaq Composite slipped 0.46%.
Micron Technology jumped 10% after the memory-chip maker issued an upbeat outlook, while Qualcomm rose 4% after announcing plans to target $15 billion in annual data-center revenue by 2029. But Apple fell 5.3%, pulling the broader tech sector lower as investors reassessed valuations in a higher-rate environment.
Two Stories in Tech
The divergence highlights that “tech” is not trading as a single block right now. Chipmakers are benefiting from near-term demand tied to artificial intelligence spending. Micron’s strong forecast and Qualcomm’s ambitious data-center goals suggest investors see clear revenue catalysts in the AI buildout. For more on Micron’s strategy, see our earlier piece: Micron's $22 Billion Take-or-Pay Deals Aim to Smooth Memory Chip Cycles.
Meanwhile, the largest tech companies are being judged through a valuation lens. Marc Dizard, chief investment officer at Huntington Bank, noted that tech’s performance relative to the S&P 500 excluding tech is about 2.8 standard deviations above its long-run average since 2000. That kind of stretch can invite profit-taking, especially when interest rate expectations shift.
Rates Are the Accelerant
Dizard described megacap tech as a “long-duration” asset, meaning more of its value depends on profits expected far in the future. When investors start to expect higher interest rates for longer, the “discount rate” used to value those future profits rises, and the present-day value can fall quickly.
Even with Treasury yields easing slightly — the 10-year note at 4.386% and the 2-year at 4.111% — the market remains sensitive to any shift toward a more hawkish Federal Reserve. Higher rates disproportionately hit stocks whose valuations rely on distant earnings, which is why Apple and other megacaps can drop even as chip stocks rally.
What It Means for Investors
For everyday investors, Thursday’s action is a reminder that not all tech stocks move together. When the valuation gap between tech and the rest of the market is as wide as 2.8 standard deviations, price moves can concentrate in the most rate-sensitive megacaps rather than hitting every corner of the sector evenly.
That dynamic explains how the Dow can rise while the Nasdaq falls: Apple-type names take the valuation and rate hit, while chip firms with clearer near-term revenue tied to AI spending keep finding buyers. If this tension persists, expect more choppy days where leadership rotates within “tech” instead of moving in lockstep.
For context on how broader market moves are playing out, see our coverage of Big Tech Slumps as Rate Hike Fears Resurface, But Chip Stocks Rally on AI Demand.
Investors should also keep an eye on how rising memory chip costs might affect other tech companies. A recent Wedbush note warned that Apple may raise Mac and iPad prices as memory chip costs surge, which could further pressure the stock. Read more: Apple May Raise Mac and iPad Prices as Memory Chip Costs Surge, Wedbush Warns.
