IBM shares plunge as SK Hynix jumps

IBM’s sharpest one-day collapse in nearly four decades set the tone for a volatile session across global markets, as traders weighed weaker corporate software demand, a powerful rally in semiconductor shares, persistent U.S. inflation risks, uneven digital asset trading, fresh venture funding, and growing geopolitical concern around the Strait of Hormuz.

Shares of IBM fell 25% after the company released preliminary second-quarter sales that missed market expectations. The drop marked IBM’s steepest single-day decline since 1987 and raised fresh questions about whether corporate technology budgets are shifting away from traditional software spending and toward artificial intelligence infrastructure, chips, and servers.

The selloff stood in sharp contrast to SK Hynix, whose shares surged 22% to a record $185.90. The rally lifted the South Korean chipmaker’s market value to about $1.36 trillion, reflecting strong demand for memory chips and other semiconductor components used in artificial intelligence systems, data centers, and advanced computing hardware.

The split between IBM and SK Hynix highlighted a growing divide across the technology sector. Companies tied directly to computing infrastructure and AI hardware continued to attract strong demand, while firms more exposed to software, consulting, and legacy enterprise spending faced pressure as customers reassessed budgets.

At the same time, Federal Reserve Chair Walsh signaled that U.S. monetary policy may remain tight despite a cooler inflation reading. Walsh told Congress that a recent slowdown in consumer price growth did not mean the central bank’s inflation fight was over, reinforcing the Fed’s long-standing 2% inflation target.

June’s Consumer Price Index rose 3.5% from a year earlier, down from 4.2% in May. The decline was helped by lower energy prices, which reduced headline inflation. But Walsh said the Fed remained focused on whether price pressures were easing in a durable way, not just responding to short-term moves in fuel and energy markets.

The comments came as traders were already tracking rising tension in the Middle East, where Iranian adviser Rezai said the United States had entered an official state of war with Iran, ending previous understandings. The remarks added another source of uncertainty for financial markets, particularly because of the strategic importance of the Strait of Hormuz.

More than 20.9 million barrels of crude oil pass through the narrow waterway each day. Any disruption to shipping through the route could lift global fuel prices, complicate the inflation outlook, and increase pressure on central banks to keep borrowing costs elevated for longer.

The combination of weaker corporate earnings signals, tight monetary policy, and geopolitical risk also weighed on digital asset sentiment. Major cryptocurrencies traded unevenly, with Ethereum rising 6.75%, Bitcoin gaining 4.44%, and Zcash climbing 12.75%. At the same time, XEC fell 14.91%, while ALLO dropped 21.28%.

Among smaller digital tokens, KAITO advanced 19.75%, LIT rose 13.54%, and VELO gained 12.34%. WOO, EGLD, and GRASS also posted double-digit increases. In the meme-token segment, SJM, BWO, WSB, SMELL, and GRBG were among the most actively traded on-chain assets over the past 24 hours, reflecting continued speculative activity among retail traders even as broader market conditions remained unstable.

Spot digital asset funds also came under pressure. Reported outflows reached $424.66 million on July 13, more than reversing the $197.4 million that had entered the same funds the previous week. Since January, the funds have reportedly shed about $5.8 billion, pointing to continued caution among large market participants despite periodic rebounds in Bitcoin, Ethereum, and other major tokens.

The market action showed how quickly sentiment can shift when macroeconomic and geopolitical risks collide. Falling consumer inflation would normally support riskier assets by increasing hopes for lower interest rates. But a potential oil shock from the Middle East could reverse some of that progress by pushing fuel costs higher, lifting headline inflation and limiting the Fed’s ability to cut rates.

Fed policy remains a central issue

Walsh’s remarks before Congress suggested the Fed is not ready to declare victory over inflation. While the consumer price data showed improvement, the central bank is still monitoring wage growth, services inflation, shelter costs, and energy volatility.

Walsh also said the Fed’s 2020 policy framework would be reviewed to better define inflation dynamics and possible policy adjustments. That framework was originally designed to allow inflation to run moderately above 2% for a period after years of below-target price growth. The economic environment has since changed sharply, following the pandemic, stimulus policies, supply chain disruptions, energy shocks, and one of the fastest rate-hiking cycles in decades.

The review could influence how the Fed communicates its inflation target in future cycles. For traders, the key issue is whether the central bank will continue to prioritize strict price stability over faster economic growth. Walsh’s comments suggested that rate cuts may remain conditional on further evidence that inflation is moving sustainably toward 2%.

The Fed’s balance sheet also remains a focus. The central bank continues to hold about $6.73 trillion in total assets, even after reducing its holdings from pandemic-era highs. A large balance sheet can influence liquidity across markets, while higher interest rates raise borrowing costs for companies, consumers, and governments.

That backdrop matters for technology firms, digital assets, and early-stage companies. When rates are high, future earnings are discounted more heavily, financing becomes more expensive, and traders often become more selective. Companies with clear demand tied to AI infrastructure have been rewarded, while those with weaker growth signals have faced sharp punishment.

IBM selloff points to a spending shift

IBM’s 25% decline was driven by preliminary second-quarter sales that came in below expectations. The scale of the move reflected frustration about the company’s near-term growth prospects as corporate customers appear to be redirecting spending.

Reports indicated that some customers are prioritizing chips, servers, and other hardware needed for AI workloads over more traditional software purchases. That shift has become one of the defining themes in technology markets this year.

A growing number of large companies are upgrading data centers, buying graphics processing units, expanding server capacity, and building private AI systems. Those projects require heavy upfront spending on hardware. While software remains essential, budget competition has intensified as companies rush to secure the infrastructure needed to operate AI models and automate business processes.

IBM has long been viewed as a major enterprise technology provider, with businesses in software, consulting, cloud services, and infrastructure. But its preliminary figures raised concern that it may not be benefiting as directly from the current AI hardware boom as chipmakers and server suppliers.

The decline also hurt broader confidence in legacy technology names. A one-day fall of 25% in a company of IBM’s size is unusual and can influence sentiment across related sectors, particularly when the underlying concern involves corporate spending patterns rather than a company-specific issue alone.

SK Hynix benefits from AI chip demand

SK Hynix moved in the opposite direction. Its 22% jump to a record high showed the market’s continued appetite for semiconductor companies tied to AI, cloud computing, and high-performance memory.

The company is a major producer of memory chips, including high-bandwidth memory used in advanced AI systems. Demand for those components has increased sharply as technology firms, cloud providers, and data center operators race to expand computing capacity.

The rally pushed SK Hynix’s market value to about $1.36 trillion, placing it among the largest chip producers by capitalization. That valuation reflects not only current demand, but also expectations that AI infrastructure spending will remain elevated.

The contrast with IBM was striking. One company was punished for weaker sales tied to changing customer priorities. The other was rewarded because those same shifting priorities favor its products. That divide shows how the AI cycle is reshaping the technology sector, creating winners and losers even within the same broad industry.

Digital assets trade unevenly

Digital asset markets showed no single direction. Ethereum’s 6.75% gain and Bitcoin’s 4.44% rise suggested that traders were still willing to buy major tokens during periods of volatility. Zcash’s 12.75% advance showed stronger demand for selected privacy-focused assets.

Still, weakness in XEC and ALLO showed that the broader market remained fragile. Smaller tokens often move more sharply than major cryptocurrencies because liquidity is thinner and sentiment can turn quickly.

The gains in KAITO, LIT, VELO, WOO, EGLD, and GRASS showed that speculative pockets remained active. But the sharp decline in spot digital asset funds suggested that institutional demand was not uniformly strong.

Outflows of $424.66 million in a single day were notable because they erased the prior week’s inflows. The reported $5.8 billion in outflows since January added to concerns that larger market participants are reducing exposure or moving cautiously while interest rates remain high and geopolitical risks rise.

For traders, this has created a market defined by short bursts of momentum rather than broad conviction. Digital assets can rally quickly when liquidity improves or when inflation data softens, but they can also reverse just as quickly when bond yields rise, the dollar strengthens, or geopolitical headlines worsen.

Stablecoin firms raise new funding

Even as token prices fluctuated, companies building stablecoin infrastructure continued to secure funding.

Velocity raised $38 million in a Series A round led by Dragonfly. The company plans to expand its stablecoin payment infrastructure for institutions in the U.S., Europe, and Australia. Stablecoins have become an important part of digital payment systems because they allow fast settlement while tracking the value of traditional currencies such as the U.S. dollar.

Flex raised $70 million in a B1 round to build cross-border stablecoin banking solutions. The company cited an annual transaction scale of around $390 billion, pointing to growing demand for faster settlement in international payments.

The funding rounds showed that venture capital interest remains active in blockchain infrastructure, particularly in areas tied to payments, settlement, and stablecoins. While speculative tokens remain volatile, payment-focused blockchain companies are still seeking to build services for businesses and financial platforms.

AI companies continue to draw capital

Artificial intelligence also remained a major focus for private funding.

Open-source AI company Nous Research completed a $75 million funding round, bringing its valuation to $1.5 billion. Its AI agent platform, Hermes, has gained more than 214,000 GitHub stars and nearly 40,000 forks, showing strong developer interest.

Open-source AI has become an important part of the broader technology race. Companies and developers are using open models to build tools for automation, coding, research, customer service, and internal business operations. High GitHub activity suggests that a project is attracting attention from developers who may test, modify, and integrate the code into new products.

Brinc, an AI drone developer backed by Sam Altman, raised $125 million in a round led by Motorola Solutions and Index Ventures. The company is targeting public safety and emergency response, including drones that can support police, fire departments, and rescue teams.

The funding showed that AI capital is spreading beyond chatbots and software agents into physical systems such as drones, robotics, and emergency response tools. These sectors require more hardware development, regulatory coordination, and government relationships, but they also address clear operational needs.

Security warning hits Noxa Fi

Separately, the official social media account of Noxa Fi was reportedly compromised. Users were warned not to connect wallets or sign transactions until further notice.

Compromised social media accounts have become a recurring risk in digital asset markets. Attackers often use trusted accounts to post malicious links that can drain wallets when users approve transactions. The Noxa Fi incident served as another reminder that wallet security remains critical, particularly when fraudulent messages spread through official channels.

Traders were advised by community alerts to verify information through multiple sources and avoid signing unfamiliar transactions. In on-chain markets, a single wallet approval can give attackers access to funds, making caution essential during suspected account breaches.

Hormuz risk adds pressure

Former U.S. President Trump also commented on the Strait of Hormuz, saying he opposed the idea of charging fees for passage through the waterway. He suggested Gulf nations preferred to put capital into the U.S. rather than pay maritime tolls.

The comments came as the region drew renewed attention because of rising tensions involving Iran and the United States. The Strait of Hormuz is one of the world’s most important energy chokepoints. Any threat to passage can quickly affect oil prices, shipping costs, inflation expectations, and global risk sentiment.

For central banks, an oil price shock would be especially difficult. If energy prices rise while economic growth slows, policymakers may face a painful trade-off between controlling inflation and supporting activity. That risk helps explain why markets reacted cautiously despite cooler U.S. inflation data.

Broader market message

The latest market moves pointed to a simple but important shift: companies and traders are prioritizing hardware, liquidity, and risk control.

Corporate spending appears to be moving toward AI infrastructure, chips, and servers. That has lifted semiconductor leaders such as SK Hynix while increasing pressure on businesses that depend more heavily on traditional software demand.

At the same time, the Fed has made clear that one softer inflation report is not enough to guarantee easier policy. With headline inflation still above target and energy risks rising, interest rates may remain elevated.

Digital assets remain highly sensitive to those conditions. Strong daily gains in Bitcoin, Ethereum, Zcash, and selected smaller tokens showed that traders are still active. But heavy spot fund outflows showed that caution remains strong below the surface.

The clearest trend is not a broad move away from technology, but a more selective approach. Capital continues to flow into AI hardware, open-source AI, drones, stablecoin payments, and cross-border financial infrastructure. Yet markets are punishing companies that fail to meet growth expectations, especially when borrowing costs are high and geopolitical risks are rising.

For now, traders are watching three forces above all: whether corporate tech spending continues shifting toward hardware, whether inflation keeps cooling despite energy risk, and whether Middle East tensions threaten one of the world’s most important oil routes. The answers will shape the next phase for stocks, digital assets, commodities, and global risk appetite.