Seagate (STX) Shares Plunge 7.1% as Chip Rout Spreads
Seagate Technology shares dropped 7.1% on Tuesday, caught in a broad selloff of leveraged South Korean chip stocks, renewed skepticism over debt-funded AI capital spending, and a hawkish repricing of Federal Reserve rate expectations. The entire data storage sector is on edge ahead of Micron's quarterly earnings after the market close.
Key Numbers
Shares of Seagate Technology (NASDAQ:STX) tumbled 7.1% in afternoon trading on Tuesday, as a wave of selling swept through the data storage sector. The decline was triggered by a leverage-driven rout in South Korean chipmakers, renewed doubts about the sustainability of debt-funded AI capital spending, and a sharp repricing of Federal Reserve rate expectations that hit the year's most crowded trades.
Potential Causes
- Korean chipmaker rout: South Korean semiconductor stocks faced heavy selling pressure due to leverage concerns, spilling over into the broader storage sector.
- AI spending doubts: Skepticism about the viability of debt-financed AI investments has resurfaced, raising questions about future demand for storage solutions.
- Fed rate expectations: A hawkish repricing of Fed rate expectations has led to a risk-off sentiment, particularly affecting rate-sensitive tech stocks.
Context
The selloff comes as investors await Micron Technology's (NASDAQ:MU) quarterly earnings report after the market close. Micron's results are seen as a key barometer for the memory and storage industry and could trigger further volatility in sector stocks like Seagate.
Similar Moves in the Sector
Seagate was not alone in the downturn. Other storage companies, including Western Digital (WDC), also declined, reflecting a broad-based panic selling in the sector.
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