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Flight from chip stocks – where the stock market trend is heading now
🇦🇹 Austria /Economy & Trade

Flight from chip stocks – where the stock market trend is heading now

From Die Presse · () German

Translated from German, summarized and contextualized by DistantNews.

At a glance

Analysis Sources not specified Context piece
  • The stock performance of AT&S, a European semiconductor company, highlights a recent market trend reversal, with significant gains in the first half of the year followed by a sharp decline in July.
  • While tech stocks, particularly memory chip manufacturers like Micron, have faltered, energy, financial, and real estate stocks have emerged as July's leaders in the US S&P 500.
  • Investors appear to be shifting towards more defensive sectors, with software companies that were previously overlooked now showing renewed strength.

The dramatic stock performance of AT&S, a Styrian-based circuit board manufacturer, serves as a stark indicator of a recent shift in stock market trends. The company, recently included in the Stoxx Europe 600 Index, experienced an astonishing 555 percent gain in the first half of the year, only to become the worst performer in July with a 35 percent loss.

This volatility suggests the semiconductor rally may be nearing its end. In the US, the S&P 500 index saw energy, financial, real estate, healthcare, and consumer stocks leading gains in July, while IT values declined. This rotation indicates a preference among investors for more defensive assets.

Even within the technology sector, a rotation is evident. The NYSE FANG+ Index shows that previously weaker stocks like Palantir, Netflix, and Microsoft are now among the top performers, alongside Apple. Conversely, Micron, a memory chip manufacturer that dominated the first half, experienced double-digit losses in July. Investors are now reinvesting in software stocks that were previously shunned.

This trend is also visible in broader indices. Accenture and Cognizant, IT service providers, along with enterprise cloud software provider Workday and payment processor PayPal, were top performers in the S&P 500 in July. These companies benefited from renewed investor confidence, particularly in software firms deeply integrated into customer IT systems, and the recognition that companies require consulting for AI infrastructure implementation.

The recovery extends to employment service providers like Adecco and Randstad, French customer service outsourcing firm Teleperformance, and Rotork, a British industrial flow control equipment specialist. Gold, silver, and Bitcoin, which had fallen in the first half, stabilized or slightly increased in July. The article concludes that even with genuine megatrends like AI, overheating and sharp corrections can occur, and deeply embedded software firms are not easily displaced.

DistantNews Editorial

Originally published by Die Presse in German. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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