Tech sector retreats in October as investors reassess AI spending outlook

The technology sector (XLK) slipped nearly 8.3% in October as rising borrowing costs stoked concerns that AI infrastructure spending could slow, putting pressure on companies that have benefited from the investment boom.

In October, tech giant Nvidia (NVDA) slipped 10.4%. On the other hand, Apple (AAPL) and Microsoft (MSFT) gained 3.49% and 1.76%, respectively, in October.

Technology sector scorecard

• Sector Return: -8.29% month-to-date
• Best Performer: PTC (+33.50%)
• Top Detractor: Intel (-45.2%)
• Theme: AI CapEx pressure

Top tech performers in October:

On the individual stock front, PTC (PTC), with a market cap of $21.14B, was the biggest winner in October, rising more than 33% as the engineering software developer was acquired by Schneider Electric (SBGSF)(SBGSY) for $22.6B (€20.1B). The French conglomerate will buy PTC for $205 per share in an all-cash deal, it said in a statement. The transaction implies an enterprise value of $23.7B (€21.1B).

It was followed by Gen Digital (GEN), which gained nearly 31% in October. Roper Technologies (ROP) ranked third, rising about 28.7%.

Here are the top five gainers:

• PTC (PTC): +33.50%, Quant rating: Hold, with a score of 3.25 out of 5
• Gen Digital (GEN): +31.01%, Quant rating: Hold, with a score of 3.33 out of 5
• Roper Technologies (ROP): +28.69%, Quant rating: Hold, with a score of 3.39 out of 5
• Accenture (ACN): +21.64%, Quant rating: Hold, with a score of 3.32 out of 5
• GoDaddy (GDDY): +20.89%, Quant rating: Hold, with a score of 2.79 out of 5

Top tech detractors in October:

Intel (INTC), which lost nearly 45.20%, was the biggest detractor in October as the semi-conductor giant’s fourth-quarter guidance missed Wall Street’s estimates. The firm said it expects revenue to be between $15B and $16B, with the midpoint below the $17.05B estimate. Adjusted earnings are forecast to be $0.25 per share, below the $0.43 estimate. Adjusted gross margins are expected to be 38%, below the 42.8% estimate.

Sandisk (SNDK) ranked second, slipping more than 35.6%, despite its first-quarter results and outlook surpassing market expectations.

In October, Coherent (COHR) and Teradyne (TER) also fell 34.1% and about 34%, respectively.

Here are the top five detractors:

• Intel (INTC): -45.20%, Quant rating: Strong Buy, with a score of 4.88 out of 5
• Sandisk (SNDK): -35.62%, Quant rating: Strong Buy, with a score of 4.94 out of 5
• Coherent (COHR): -34.11%, Quant rating: Strong Buy, with a score of 4.78 out of 5
• Teradyne (TER): -34.01%, Quant rating: Hold, with a score of 3.36 out of 5
• Twilio (TWLO): -31.94%, Quant rating: Hold, with a score of 3.47 out of 5