Thursday was not a good day to own tech stocks. Wall Street's tech selloff picked up serious speed, erasing more than $500 billion in market value across ten heavyweight names in a single session.
Here's what makes this particular bloodbath interesting: it wasn't just the AI-disruption story hitting software companies that we've been watching for weeks. This time, the old-school hardware giants took it on the chin too.
According to Coinmarketcap.com, here's the damage report for the ten largest single-day market cap losses in tech on Thursday:
What Triggered the Tech Meltdown?
The software sector has been dealing with AI disruption anxiety for a while now. The iShares Expanded Tech-Software Sector ETF (IGV) dropped more than 3% Thursday, revisiting lows from last week. Year to date, the sector is down over 20%.
But Thursday's broader tech collapse had a very specific trigger: Cisco's earnings report.
Cisco plunged 11% despite actually beating expectations. The company posted earnings of $1.04 per share, topping the $1.02 consensus. Revenue landed at $15.35 billion, above the $15.11 billion estimate, powered by solid networking performance.
So what went wrong? Margins.
Goldman Sachs analyst Michael Ng pointed out that Cisco's networking revenue jumped 21% year over year and orders accelerated above 20%. The problem was fiscal third-quarter gross margin guidance of 65.5%-66.5%, which badly missed the 68% consensus. The culprits: a heavier hardware mix and rising commodity costs.
Management blamed memory inflation and said they're working on pricing adjustments and long-term supply agreements running through fiscal 2026.
Then China's tech giant Lenovo basically confirmed everyone's worst fears about mounting pressure on PC shipments thanks to worsening memory shortages.
CEO Yang Yuanqing told Reuters on Thursday that the company expects unit pressure but plans to protect profitability.
The market didn't wait around to see how that plays out. Peers Dell Technologies Inc. (DELL) and HP Inc. (HPQ) got hammered, falling 10.2% and 7%, respectively. The message is clear: rising input costs and supply constraints are now competing with AI disruption risks as the dominant headwinds dragging down the tech sector.
