What Happened?

A number of stocks fell in the morning session after benchmark 10-year U.S. Treasury yields rose above 5.1%, renewing pressure on high-multiple technology valuations. The pullback follows a six-session climb that had lifted the Philadelphia Semiconductor Index by 14% since the start of the week, according to Nasdaq index data. 

Bond yields reached their highest level since July 2007 after a stronger-than-expected September composite purchasing managers' index of 58.4 pushed the implied probability of an October Federal Reserve interest-rate hike to 73%, according to Fed funds futures reported by Reuters. Sector sentiment also faced cross-currents from competitor supply and investor positioning. Samsung announced it is allocating over half of its 4-nanometer foundry capacity to high-bandwidth memory base dies, raising concerns about future supply competition. 

Meanwhile, investor Michael Burry expanded short positions in Micron and semiconductor exchange-traded funds on expectations that memory shortages are cyclical rather than structural, CNBC reported. When benchmark bond yields rise, semiconductor valuations face mechanical headwinds because investors heavily discount cash flows projected years into the future. Paired with expanding foundry capacity and looming supply additions, higher capital costs make investors less willing to pay premium multiples for cyclical hardware makers until end-market demand visibility clears.

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:

• Memory Semiconductors company Western Digital (NASDAQ: WDC) fell 4.1%. Is now the time to buy Western Digital? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company FormFactor (NASDAQ: FORM) fell 3.9%. Is now the time to buy FormFactor? Access our full analysis report here, it’s free.
• Processors and Graphics Chips company Penguin Solutions (NASDAQ: PENG) fell 3.1%. Is now the time to buy Penguin Solutions? Access our full analysis report here, it’s free.
• Analog Semiconductors company Himax (NASDAQ: HIMX) fell 3%. Is now the time to buy Himax? Access our full analysis report here, it’s free.
• Analog Semiconductors company Power Integrations (NASDAQ: POWI) fell 3.1%. Is now the time to buy Power Integrations? Access our full analysis report here, it’s free.

Zooming In On Western Digital (WDC)

Western Digital’s shares are extremely volatile and have had 76 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 10 days ago when the stock dropped 4.8% on the news that the company announced the redemption of all $109.5 million of its 3% convertible notes amid broader weakness across AI memory and storage stocks. Under the terms of the redemption set for November 16, 2026, noteholders are permitted to convert their notes beforehand, with principal settled in cash and any remaining value delivered in common stock per TipRanks. The decline also coincided with broader selling pressure across the sector, where peers including Micron, SanDisk, and SK Hynix fell as investors reassessed the industry outlook amid analyst price target reviews and potential demand risks in the AI storage market.

Western Digital is up 144% since the beginning of the year, but at $457.76 per share, it is still trading 38.7% below its 52-week high of $746.23 from June 2026. Investors who bought $1,000 worth of Western Digital’s shares 5 years ago would now be looking at an investment worth $7,901.

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