There isn't one 'smoking gun' catalyst - but investors could be reacting to Chinese memory developments, Korean stock-market weakness and Intel's inability to sustain postearnings gains

Intel's stock has failed to sustain gains in the wake of a strong earnings report.

Major chip stocks were falling on Friday, with the shares weighed down by a "handful of narratives," according to one expert.

"By far the most asked question today is why the semiconductor complex is lagging so badly," Mizuho managing director Daniel O'Regan wrote in a note to clients, while adding that the rest of the tech sector was holding up "pretty well."

The iShares Semiconductor ETF SOXX was down 2.5% on Friday. Shares of Micron Technology $(MU)$ and Intel $(INTC)$ were down 5.2% and 4.8%, respectively, as of midday. Optical stocks Coherent (COHR) and Lumentum Holdings $(LITE)$ were each off more than 7%.

O'Regan said he didn't think there was just "one smoking gun" driving the declines. Instead, he pointed to a slew of reasons.

For one, Intel's stock gave back early gains despite a knockout earnings report. The fact that the company isn't getting rewarded for its earnings could be weighing on the broader sector, O'Regan said.

Intel posted its strongest revenue growth in 15 years during the second quarter and delivered results that were broadly better than expected.

See also: Intel earnings show just how dramatically the company has come back from being 'near-dead'

On top of that, O'Regan noted that Chinese memory-chip maker ChangXin Memory Technologies is expected to IPO in Shanghai on Monday. O'Regan believes that any threat that Chinese memory poses to U.S. memory makers is "overstated" - yet added that reports that Apple $(AAPL)$ has been meeting with CXMT could be giving investors reason to think about the company's impact.

The U.S. has held off on blacklisting CXMT, according to Reuters, though the company has been designated as a national-security risk and approved for the Commerce Department's Entity List.

O'Regan also flagged that a broader conversation over hyperscaler spending is growing "louder," which could be leading investors to question whether borrowing costs will continue to pose financing risks for the wider artificial-intelligence-infrastructure buildout and the companies involved in it.

Capital expenditures by the six leading hyperscalers are expected to reach roughly $785 billion collectively this year and nearly $1 trillion in 2027, according to a Moody's Ratings report released on Wednesday. The report named Microsoft $(MSFT)$, Amazon.com (AMZN), Alphabet $(GOOG)$ $(GOOGL)$, Meta Platforms (META), Oracle $(ORCL)$ and CoreWeave (CRWV) as the main hyperscalers.

"Circularity among AI labs, hyperscalers and high-end chip companies" is adding to risks for the industry, wrote Moody's Ratings authors led by senior vice president Raj Joshi - noting deals between top AI labs, chip companies and others in the value chain.

"The partnership, ownership and guaranty agreements are a strategic step by the hyperscalers and semiconductor companies to entrench their hardware and software technologies within the developer base, but magnify the already significant risk should the massive projected demand for AI products fail to materialize," the report said.

O'Regan further pointed out that weakness in the Korean chip sector could be reverberating across the sector on Friday. The Korea Composite Stock Price Index KR:180721 was down 5.7% on Friday.

-Hannah Pedone

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July 24, 2026 14:37 ET (18:37 GMT)

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