Nowhere to hide: Tech selloff hits software and chip stocks alike
Summary
Software and semiconductor companies experienced a shared decline on Friday as market participants reacted to ongoing concerns regarding artificial intelligence and interest rates. Although these two technology sectors generally followed different trading paths earlier in the year, they both dropped simultaneously during the recent session.
Software and chip stocks have spent most of 2026 trading against each other. On Friday they fell together. The iShares Expanded Tech-Software ETF (IGV) closed down 4.8% and the iShares Semiconductor ETF (SOXX) lost 4.1%, as worries about AI spending and interest rates hit the whole tech sector at once.
The damage was wide. Twilio (TWLO) fell 10.6%, the worst performer in the S&P 500. Oracle dropped 5%, ServiceNow 4% and Salesforce 2%. Cybersecurity took an extra hit after Palo Alto Networks disclosed a vulnerability that CISA added to its known-exploited catalog; PANW and CrowdStrike both fell more than 7%. On the chip side, AMD lost 6%, Intel 5.8%, Micron 5.6% and Broadcom 4.5%.
The Nasdaq Composite fell 2.1% to 26,140, the S&P 500 lost 1.1% to 7,659 and the Dow slipped 0.3%. The S&P 500 gave back about 2% for the week, wiping out the prior week's run to a record, and the Nasdaq posted its first weekly loss in five weeks.
Analysts pointed to two forces. Investors are questioning how long the AI infrastructure spending boom can last, and higher rates make debt-funded data-center buildouts more expensive while cutting the value of software companies' far-off cash flows. Hot consumer and wholesale inflation reports this week pushed fed funds futures to about 74% odds of a December rate hike, up from roughly 50% a month ago. Fed Chair Kevin Warsh declined to signal the next move when he spoke in Bangkok on Friday. The 10-year Treasury yield ended near 5.09%, after topping 5.30% earlier this month.
Sources: Dow Jones / MarketWatch via Tiger Brokers · BNN Bloomberg · Webull market data
Our Take
The rotation trade broke. Earlier this week money was leaving chips and hiding in software, on the idea that the two groups move in opposite directions. Friday showed that both depend on the same thing: cheap money and confidence in AI spending. When rates and inflation are the story, everything in tech moves together and there is no safe corner.
For day traders, that changes the playbook. On days like this, individual tech names follow QQQ and SMH, not their own news, so fighting a single stock against a falling sector is a low-odds trade. Watch the index first. Momentum setups in tech only make sense once QQQ stops making lower lows.
Levels we are watching for Monday:
- QQQ closed at $709.80 (-2.5%) and traded near $707.87 after hours. Support is Friday's $707.23 low; resistance is $725-728 (Friday's open and Thursday's close). A break under $707 would put the sellers back in control.
- SMH closed at $539.79 (-3.4%) but bounced to about $542 after hours. Support is the $539 intraday low; resistance is $551-555 (Friday's open and high).
- IGV closed at $104.34 (-4.8%), right on its $103.73 low, a weak close. Holding $103.70 matters; it would need to get back above $110 to repair the chart.
With the 10-year yield above 5%, rate headlines move tech more than earnings right now. Check yields and futures before the open.
Opinion of Tech & Money Press. Not financial advice.
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