What Happened?

A number of stocks fell in the afternoon session after reports revealed tech giant Oracle is generating lower-than-expected margins in its cloud business and losing money on Nvidia chip rentals. 

The news caused Oracle's shares to tumble over 5% and sparked a wider tech sell-off, pulling the S&P 500 and Nasdaq down. Investors are growing concerned about the actual strength and profitability of artificial intelligence demand, which has been a primary driver of the market's recent record-breaking run. Oracle's struggles suggest that the massive capital investments required for AI, such as acquiring expensive chips, may not be translating into immediate or guaranteed profits. This has led to broader anxiety that the AI boom's financial returns might be less certain than previously anticipated, causing traders to pull back from the sector. 

Compounding these worries was the ongoing U.S. government shutdown, in its second week, with no clear resolution in sight from Washington. This political uncertainty drove investors away from riskier assets and towards safe havens, a trend highlighted by gold hitting a record $4,000 per ounce for the first time.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Semiconductor Manufacturing company Amkor (NASDAQ: AMKR) fell 2.6%. Is now the time to buy Amkor? Access our full analysis report here, it’s free for active Edge members.
• Semiconductor Manufacturing company Amtech (NASDAQ: ASYS) fell 2.8%. Is now the time to buy Amtech? Access our full analysis report here, it’s free for active Edge members.
• Memory Semiconductors company Micron (NASDAQ: MU) fell 2.7%. Is now the time to buy Micron? Access our full analysis report here, it’s free for active Edge members.
• Memory Semiconductors company Seagate Technology (NASDAQ: STX) fell 7.1%. Is now the time to buy Seagate Technology? Access our full analysis report here, it’s free for active Edge members.
• Semiconductor Manufacturing company KLA Corporation (NASDAQ: KLAC) fell 4%. Is now the time to buy KLA Corporation? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Seagate Technology (STX)

Seagate Technology’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 8 days ago when the stock gained 3.8% on the news that it received multiple price target upgrades from Wall Street analysts who anticipate a surge in demand driven by artificial intelligence (AI). 

Morgan Stanley led the bullish sentiment, boosting its price target on Seagate to $265 from $168, citing a "stronger for longer" demand cycle for hard disk drives (HDDs) due to cloud infrastructure spending and growing data retention needs for AI. Rosenblatt Securities also raised its target to $250 from $200, maintaining a Buy rating and noting that growing AI data center projects will fuel HDD demand. Analysts at Rosenblatt expect Seagate's new HAMR-based drives to lead to higher average selling prices and expanded margins.

Seagate Technology is up 160% since the beginning of the year, but at $224.60 per share, it is still trading 12.6% below its 52-week high of $256.84 from September 2025. Investors who bought $1,000 worth of Seagate Technology’s shares 5 years ago would now be looking at an investment worth $4,452.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.