Faced with such a sharp drop in the stock market as has occurred in this last one, blackest Friday, what some investors are wondering is whether that much feared moment has arrived tech bubble burst. But although the red marks are actually significant, there are clues That shouldn't be overlooked, leading one to believe this is more of a breather before starting a new rally. From the arrival of mega-IPOs on Wall Street, to a very fruitful earnings season, to Trump's idea of investing in AI, to the excessive fears of a Fed rate hike: here are some of the factors to consider. before throwing yourself into despair.
From Broadcom's lit fuse to the interest rate scare: the story of a two-day collapse
Of course, the reality is harsh: on Friday we witnessed a real collapse of chip manufacturers on Wall Street. The sector of semiconductors has $1.300 trillion written off of stock market value.
Nvidia, the world's most valuable chipmaker, lost about 6%, reducing its market capitalization by more than $300 billion. micron Technology suffered a 13% drop, wiping out approximately $150 billion in market capitalization. Marvell Technology returned 17%, while Amd has lost almost 11%. Not to mention Broadcom which lost another 8% after the approximately -12% of the day before, when it published quarterly data that the market did not like and which became the spark that triggered sales across the industry.
The Philadelphia Chip Index suffered a 10,3% drop, recording its worst daily loss since March 2020, when the coronavirus pandemic sent global markets into a tailspin. The semiconductor index had reached an all-time high just last Wednesday and, even after Friday's losses, remains up 73% since the beginning of the year.
Adding fuel to a market already stung by Broadcom data was the arrival on Friday of US employment data: very strong but which can be read in two ways: on the one hand the good health of the economy American, on the other hand the indication that for this very reason the Fed could have more room for raise ratesThese latest concerns sent the S&P 500 index down 2,6%.
Has the bubble burst or not? Here's what to analyze before giving in to despair.
"The semiconductor sector was excessively overbought. That's why we're seeing prices collapse. I don't think this is the end of the (semiconductor) bull market," Ohsung Kwon, chief equity strategist at Wells Fargo, told Reuters.
"In cycling, the sprint isn't judged while the rider accelerates. It's measured when the peloton stops to look at the gap," observes eToro's Gabriel Debach. "The tech sector has done exactly this in recent months (and years); it has engaged the great ratio on the wave of AI, it has gradually opened a gap on the rest of the market, and now it finds itself at the center of a debate that accompanies every surge of this magnitude. Bubble or pause? Fall or technical pause? Since March, the tech sector has certainly carried the entire market on its shoulders, without ever taking a breather. "A few steps back are physiological. Bubbles rarely burst during the investment phase. They burst when the time comes to demonstrate that those investments can generate returns."
There are also concrete facts to look at, such as the quarterly earnings growth S&P 500 EPS year-over-year. The trend points to "a crazy rally after the 2020 crash," says Ferdinando Colella of eToro. "Reducing the current market phase to just the 'Nvidia effect' is a misguided perspective. The reality is that we're witnessing a profit explosion that has left analysts themselves stunned: while estimates in March called for an 11% earnings expansion, actual data now shows a 27% jump for the first quarter of 2026. And the details defining this moment are almost unbelievable and make us understand that this isn't just speculation."
First, two-thirds of S&P 500 companies beat earnings estimates in the first quarter, but the most astonishing aspect is the parabolic movement made by the Memory stock index (semiconductors and memories), which rose from 175 to 1500 points in just one year. New giants they entered Olympus, as Samsung, returned to the club of companies with capitalization exceeding one trillion dollars or Sk Hynix “This is all fueled by a real cash generation" says Colella again. "Of course, in the short term there can always be factors such as geopolitical tensions or inflation data that frighten and create volatility. But history teaches us that, once the passing news has been digested, the price lists start to run again because the most important thing that investors look at, that the market looks at, is always mainly company profits".
Trump's Artificial Intelligence Strategies
The first to believe in development and further expansion of the sector it is the president of the United States himself and his firepower It may not be without impact on stock prices. Trump told reporters on Friday that his team is considering the idea of artificial intelligence companies offer the American public a stake in their companies, adding that he plans to host a meeting with executives from companies in this sector as early as next week in a context in which the US administration wants to accelerate the development and use of AI also for applications National securityMeanwhile, the digital news site note reported Thursday that senior U.S. officials have had preliminary talks with artificial intelligence companies about the possibility that even the government itself shopping some shares of their companies. Moreover, the Trump administration has assumed a significant role in the US corporate sector, acquiring stakes in the American chipmaker Intel and in some companies active in the rare earth and quantum mechanics sectors.
The Race for Funding: Meta and Google's Recent Raisings Lead Up to the Next Mega IPOs
The fuel for the entire tech sector's expansion is, quite simply, money. Lots of money. "The capital expenditure projected for AI development, already historic at the beginning of the year, has accelerated further," observes Antonio Tognoli, financial analyst and vice president of the National Association of Private and Investment Banking. "Investment estimates by large hyperscalers have soared in just two quarters, with annual spending projected to approach $1.000 trillion by 2028."
The question is whether those investments can generate returns"Earnings are holding up for now. The question the market will increasingly ask in the coming quarters is: will the hyperscalers' massive spending on AI infrastructure translate into commensurate profits? As long as the answer is yes, the rally has the strength to continue. When it begins to falter, that pause could become something more," says Debach.
Meanwhile, the race for funding is more intense than ever. Meta is considering raising tens of billions of dollars through a stock offering and other “creative” ways to address the surge in artificial intelligence-related spending, the company said Friday. Financial TimesMeta filed for its largest-ever bond issue in October, up to $30 billion, and also closed a $27 billion financing deal with Blue Owl Capital. Last April, the parent company of Facebook and Instagram raised its annual capital spending forecast to between $125 billion and $145 billion. This week Google Alphabet has decided to raise $84,75 billion in larger equity offerings, according to the latest announcements.
But then there are on the horizon, not too far away, never-before-seen stock market debuts with SpaceX expected on June 12th, followed in the following weeks by anthropic e Open AI. Elon Musk is preparing to launch an initial public offering of SpaceX at an exceptionally high valuation of $1.750 trillion, with plans to leave a good chunk for the company as well. retail investors. The flip side of the coin is right here: who wants to participate in this race? Some analysts see the recent sell-off on Wall Street as a way to monetize the strong earnings for then participate in large IPOs.
