October was a BRUTAL month for Big Tech. Hyperscalers. Chipmakers. Other AI plays. They all tanked. So...what’s next?
Take a look at my MoneyShow Chart of the Day, which shows the one-month performance of four big names in big tech – Alphabet Inc. (GOOGL), Meta Platforms Inc. (META), Marvell Technology Inc. (MRVL), and Intel Corp. (INTC). Alphabet is down 20%. Meta is off 16%. Marvell has shed 24.3%, while Intel has plunged 44.6%.
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GOOGL (Red), META (Blue), MRVL (Green), INTC (Black) – 1-Mo. % Change
Source: TradingView
In other words, we’re seeing widespread pain in a sector that had been red-hot for the last few years. Questions about AI borrowing, AI spending, and ultimately, the future returns on hundreds of billions of dollars in AI capex are fueling the selloff. Iffy earnings reports from Alphabet and Meta recently added to the pressure.
Then last Friday, Intel plunged the most in a single day since the 1970s after it warned about weakness in the PC market. Even reports – then confirmation – that Marvell was acquiring Lumentum Holdings Inc. (LITE) for a whopping $115 billion in stock couldn’t stem the selling tide.
What could turn things around then? We have the benefit of market seasonality on our side, with November and December typically solid months for the stock market. Any whiff of détente in the Middle East would help with oil prices, giving equities some support.
But that’s broad market stuff. In the tech sector, a successful Anthropic IPO, or a big earnings beat, or narrowing AI bond spreads are the kinds of triggers I’d be watching for. Sentiment has gotten very gloomy very quickly – so any relief rally would likely be powerful!