Tech Stocks Tumble as Cisco's Guidance Sends Shockwaves Through Wall Street
MarketDash
Cisco beat earnings but warned on margins, sparking an 11% plunge and dragging the entire tech sector down. The VIX jumped 16% as investors questioned whether AI-driven profits are as durable as hoped.
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Sometimes Wall Street gets spooked by what companies don't say more than what they do. Thursday was one of those days.
Cisco Systems Inc. (CSCO) reported solid earnings and revenue that topped expectations. The kind of numbers that, in a normal world, might earn you a nice pat on the back and maybe a 2% gain. Instead, Cisco shares cratered more than 11%, marking the networking giant's worst single-day performance since May 2022. The culprit? Management's cautious outlook on future margins, which immediately reignited questions about whether the AI boom can actually deliver sustainable profits or if we're all just pretending really expensive chips will somehow pay for themselves.
The selloff didn't stop at Cisco. It spread like wildfire through the tech sector, dragging down anything that remotely looked like it might be affected by AI disruption or margin compression. The iShares Tech-Expanded Software Sector ETF (IGV), which investors watch closely as a proxy for AI-related risk, dropped 3.7% and revisited lows it touched just last week. Not exactly the resilient bounce-back many were hoping for.
AppLovin Corp. (APP) got hit even harder, plunging 18% despite beating earnings estimates. Once again, it was the guidance that spooked everyone. The stock is now down a brutal 45% year to date, making it one of the worst performers in the IGV basket. When you beat estimates but still drop nearly a fifth of your market value in a day, you know the market is in a skeptical mood.
Robinhood Markets Inc. (HOOD), which rode the AI-fueled rally to impressive heights earlier this year, slid 9%. The fintech darling was on pace for its worst two-day selloff since the tariff shock triggered by President Trump back in April 2025. Even the stocks that seemed untouchable a few months ago suddenly looked vulnerable.
Hardware Takes a Hit as Chip Shortages Bite
The pain wasn't confined to software. Hardware makers also took it on the chin as warnings about worsening chip shortages rippled through the sector. Lenovo sounded the alarm about a deepening global memory and storage crunch that could hammer PC shipments, and investors didn't wait around to see if they were exaggerating.
Dell Technologies Inc. (DELL) dropped 10%, while Apple Inc. (AAPL) fell 5%, marking its sharpest decline since "Liberation Day." When Apple moves that much in a single session, you know something's up. The market seems to be realizing that supply constraints aren't just an abstract problem for earnings calls—they're a real drag on growth.
But here's where it gets interesting. While hardware companies that need chips suffered, the memory producers themselves continued their relentless rally. Seagate Technologies Inc. (STX) rose 8%, Western Digital Corp. (WDC) gained 6%, and Sandisk Corp. (SNDK) advanced 4.5%. Tightening supply dynamics are bad news if you're trying to build computers, but they're excellent news if you're the one selling the scarce components. Economics 101 playing out in real time.
Broad Market Carnage
By midday in New York, the damage was widespread. The Nasdaq 100 was down 1.7%, while the S&P 500 and Dow Jones Industrial Average each lost 1.2%. Small caps had an even rougher day, with the Russell 2000 sliding 2.4%. Nobody was having fun except maybe the volatility traders.
Speaking of volatility, the VIX jumped 16%, reflecting genuine nervousness about what comes next. Investors rotated into defensive sectors—utilities and consumer staples outperformed as people looked for safer places to park their money. When utilities are the heroes of the day, you know it's been a rough session for growth stocks.
Commodities Join the Selloff
Commodities didn't escape the carnage either. Gold fell 2.7%, slipping back below $5,000 an ounce. Silver had an even worse day, plunging more than 8% to $77. These are the kinds of moves that make precious metals traders wonder if they should've just bought bonds.
Crude oil also retreated sharply, with WTI down 3% on rising expectations of a potential U.S.–Iran deal that could ease geopolitical risk premiums. Lower oil prices are generally good news for consumers, but when they're falling because of broad risk-off sentiment, it's hard to call it a win.
In crypto markets, Bitcoin (BTC) extended its slide, falling 2% to $65,000 and heading toward a fourth consecutive session of losses. Even the digital gold alternative couldn't catch a bid on Thursday.
Thursday's Performance In Major US Indices, ETFs
Major Indices
Price
1-day %Chg
Dow Jones
49,517.97
-1.2%
S&P 500
6,856.29
-1.2%
Nasdaq 100
24,772.28
-1.7%
Russell 2000
2,605.61
-2.4%
Updated by 1:00 p.m. ET
According to market data:
The Vanguard S&P 500 ETF (NYSE:VOO) fell 1.17% to $628.92.
The SPDR Dow Jones Industrial Average (NYSE:DIA) moved down 1.17% to $495.47.
The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) eased 1.63% to $603.14.
The iShares Russell 2000 ETF (NYSE:IWM) traded at $259.30, down 2.13%.
The Utilities Select Sector SPDR Fund (NYSE:XLU) outperformed, up 1.9%; the Technology Select Sector SPDR Fund (NYSE:XLK) lagged, down 2.2%.
Russell 1000's Top 5 Gainers And Losers On Thursday