Tech Stocks Struggle as the Broad US Market Stays Flat

U.S. stocks traded mostly flat on Wednesday as disappointing forecasts from Advanced Micro Devices Inc. (AMD) and Super Micro Computer Inc. reignited concerns about lofty tech valuations.

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The S&P 500 hovered near the unchanged mark at mid-morning in New York, making a mild recovery after Tuesday’s losses. The Nasdaq 100 was similarly steady, while the Cboe Volatility Index (VIX) lingered around 19, reflecting a cautious mood across markets.

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Over the past six months, large-cap technology shares have staged an extraordinary rally, but some analysts believe the recent slowdown was inevitable. “Big tech stocks have their hands on their knees, sweating and gasping for air,” said Robert Edwards, chief investment officer at Edwards Asset Management. “It’s a natural pause after such an incredible run. This looks more like a short breather than a breakdown especially since earnings have been outpacing revenue growth.”

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AMD shares fell 1.3% after the company’s latest earnings report failed to meet investors’ lofty expectations. While results were solid, its revenue forecast disappointed traders hoping for a stronger signal of growth, particularly given the stock’s steep run-up ahead of the announcement. The reaction rippled through the broader semiconductor sector, where valuations have soared amid relentless enthusiasm for artificial intelligence hardware.

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The pressure deepened with Super Micro Computer, a favorite among AI-focused investors, tumbling 7.6% after missing Wall Street’s first-quarter sales estimates and issuing a weaker-than-expected outlook for the current quarter. The setback reinforced worries that even top AI infrastructure players could struggle to justify current valuations if growth expectations don’t keep pace.

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Despite the tech wobble, Edwards remains optimistic that the market is entering a healthier, more diversified phase. “Big tech still has fuel left,” he said, “but the baton is about to be passed to the well-rested and undervalued sectors like consumer staples, healthcare, and small-to-mid caps. Those areas are gearing up to take the lead over the next year or so, and almost no one is paying attention.”

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Investors also digested new labor market data from ADP Research, which showed that private-sector employment increased by 42,000 jobs in October, rebounding from a 29,000 decline in the previous month. The report, one of the few available economic indicators during the prolonged U.S. government shutdown, offered a limited but important glimpse into hiring trends.

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While the gain suggests the labor market remains resilient, it also aligns with a broader cooling in job creation. “Private-sector data are becoming increasingly valuable as government releases remain offline,” said Jeffrey Roach, chief economist at LPL Financial. “The ADP and BLS data have become more correlated in recent years, but both can be noisy. When you smooth out the volatility, both are flashing early warning signs that the job market is losing momentum.”

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Another factor on investors’ radar is the U.S. Supreme Court, which will soon review a case concerning former President Donald Trump’s tariffs. The justices are set to determine whether Trump exceeded his constitutional authority when he implemented a series of “reciprocal” tariffs on imports from various countries. The decision could have meaningful implications for future trade policy and corporate supply chains.

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In corporate highlights, McDonald’s Corp. shares gained after the fast-food giant posted stronger-than-expected U.S. sales growth in the latest quarter, signaling that consumer spending remains firm despite higher prices.

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Meanwhile, Axon Enterprise Inc., the maker of Taser devices, plunged after reporting third-quarter earnings that fell short of analyst expectations. Pinterest Inc. also slumped as its revenue guidance disappointed investors hoping for stronger momentum in digital advertising.

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Overall, Wednesday’s muted session reflected a market in transition one weighing strong fundamentals against stretched valuations and uneven economic data. With mega-cap tech stocks finally pausing for breath, investors appear to be bracing for what could be the next phase of leadership in a market that’s searching for balance after months of AI-fueled exuberance.

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