With almost no rational reason, shares of Western Digital (WDC) and Seagate Technology (STX) cratered last Friday. The hard drive storage suppliers fell after markets worried that Toshiba sought to bring manufacturing facilities online.
Nikkei Asia’s report that Toshiba might double the hard drive supply on the market sent both WDC and STX stocks down by 10%. The panic is hardly justified: it would take years before Toshiba brought production online. Additionally, the two firms have a combined 80% market share. Toshiba ranks third with around 18% of the market (or around 10% by capacity).
Despite the irrational drop, Seagate stock has traded in a range between $750 and $1000 since June. But AI-related high-flying stocks like Lumentum (LITE) traded at a new high. Last week, Nasdaq (QQQ) closed at an all-time high, ignoring the threat of high U.S. bond yields and rising energy prices, adding to inflation. Markets believe that a consumer slowdown would not hurt the AI boom.
Markets are confident that AI does not threaten the consulting firm business model. Accenture (ACN) stock crashed to a $118.15 low in June, only to trend higher. The stock broke out to above $200 after posting quarterly results. Although ACN stock dropped by 6.31% on Oct. 2, the firm issued a strong outlook.
Corporations need more consultants to review and fix code written by AI. Instead of spending more on AI tokens, firms will need more consultants to move their business transformation forward.
