The memory-chip stocks that powered the market's record first half sold off hard as the third quarter opened, with Micron Technology and SanDisk each falling 10.6 percent on Wednesday and the slide extending into Thursday trading, when Micron changed hands below $1,000 — down from a June 30 close of $1,154.29. Intel lost 9 percent Wednesday, Applied Materials 10 percent and AMD 6.9 percent, dragging the Nasdaq Composite down 0.66 percent to 26,040.03. The S&P 500 slipped 0.22 percent to 7,483.23, while the Dow Jones Industrial Average — which touched a record earlier in the session — closed essentially flat at 52,305.24.
There was no single trigger, which is part of what unsettled traders. Instead, several pressures converged on the market's most crowded trade at the moment portfolio managers were resetting for the second half.
The first was the Federal Reserve. A Cleveland Fed official suggested the US may need higher interest rates, and new Fed Chair Kevin Warsh offered no dovish counterweight ahead of key jobs data — a combination that lifted rate expectations and hit long-duration growth stocks hardest, chipmakers first among them.
The second was legal. A class action filed in California last week alleges that Samsung, SK Hynix and Micron illegally coordinated to restrict DRAM supply and inflate prices, which have risen roughly 700 percent over four years. Whatever the suit's merits, it puts a question mark over the pricing structure that produced the industry's blowout earnings — including Micron's own record results reported last week.
The third was simple arithmetic. Micron entered Wednesday up 305 percent for the year; SanDisk was up 858 percent and Western Digital 271 percent. Runs of that size make the stocks first in line for institutional rebalancing at a quarter boundary, and analysts also flagged research warning that PC makers, hyperscalers and Nvidia partners may economize on memory precisely because prices have run so hot.
The rout was not indiscriminate. Meta Platforms jumped more than 10 percent Wednesday after Bloomberg reported the company is building a cloud business to sell excess AI computing capacity — investors rewarding a plan to turn capital spending into revenue even as they punished the suppliers of that capacity. Money also rotated toward defensive sectors including healthcare and consumer staples.
Nothing in the fundamentals has visibly broken. Micron's latest quarter beat estimates comfortably and its guidance points to continued AI-driven demand under multi-year customer agreements. The bull case — structural memory shortage, insatiable data-center buildouts — survived Wednesday intact. What cracked was the assumption that the trade only goes up: after a first half in which the Nasdaq gained roughly 20 percent, the third quarter has opened with a reminder of how quickly crowded positioning unwinds when the Fed, the courts and the calendar line up against it.