Technology Sector Sheds $450 Billion Amid AI Spending Scrutiny

U.S. equity markets experienced a pronounced downturn on Thursday, February 12, 2026, as technology shares retreated sharply, erasing an estimated $450 billion in market capitalization from the group known as the "Magnificent Seven" in a single trading session. This broad market correction stemmed from mounting investor apprehension concerning the substantial capital expenditure required for Artificial Intelligence development and the implications of stronger-than-expected economic data, which tempered near-term expectations for Federal Reserve interest rate reductions.

The Dow Jones Industrial Average concluded the day having fallen 1.3%, settling at 49,451.98, below the 50,000-point threshold. Concurrently, the S&P 500 relinquished all of its gains for 2026, closing at 6,832.76, marking its second-worst day since Thanksgiving, though it remained near its all-time high established late the previous month. The technology sector was the primary epicenter for the selling pressure, influenced by less-than-ideal forward guidance from several key industry firms, signaling a rotation away from high-growth AI narratives toward more cyclical investment opportunities as investors began demanding tangible returns on massive investments.

Components of the "Magnificent Seven" registered notable declines; for example, Apple's stock fell between 3.7% and 5.0% during the session, while Amazon.com also contributed significantly to the S&P 500's drag. Meta Platforms retreated by nearly 3% as market participants questioned the long-term sustainability of recent technology valuations. Specific corporate disclosures exacerbated sector-wide anxiety, particularly regarding hardware and enterprise spending. Cisco Systems' stock plummeted over 12%, closing down 12.3%, after issuing cautious forward guidance suggesting margin compression, which analysts linked to higher computer memory prices driven by intense AI chip demand.

This component cost pressure extended to other hardware manufacturers. PC makers faced headwinds after Lenovo issued warnings about shipment constraints stemming from the memory chip shortage, causing Dell Technologies to drop as much as 9.2% and HP to lose 5.4%. The valuation correction among U.S. tech giants, collectively projected to deploy approximately $650 billion in capital expenditure for AI infrastructure this year, signals a global reassessment of technology valuations against immediate operational costs. This sentiment drove a notable sector rotation, with cyclical stocks like Walmart climbing 3% and aerospace manufacturer Boeing advancing 2% as investors favored companies tied to current economic growth.

The severity of the technology rout was evident as the iShares Expanded Tech-Software Sector ETF (IGV) lost 3% on the day, bringing its total decline from recent peaks to 32%. This market activity highlights a critical juncture where investor focus has pivoted from the promise of future AI productivity to the immediate financial strain of building that infrastructure. With the Consumer Price Index report scheduled for Friday, February 13, investors are navigating a complex environment where strong labor data dampens rate cut hopes, while corporate earnings reports continue to reveal the cost pressures inherent in the AI arms race.