Commentary
“It’s different this time.” Few phrases have cost investors more money throughout history.
Every generation believes technology has ushered in a new era in which the old rules no longer apply. During the internet boom, investors believed the digital revolution would justify any valuation.
More recently, artificial intelligence has ignited another wave of excitement, pushing many technology companies to record highs.
Yet history repeatedly teaches the same lesson: innovation does not eliminate investment risk. This summer, investors witnessed one of the most striking contradictions in recent market history.
Apple climbed to an all-time high, reflecting investor confidence in one of the world’s strongest technology franchises. At the same time, many semiconductor stocks suffered one of their worst monthly declines in years as concerns emerged over valuation, future demand, and increasing global competition.
Technology has created some of the greatest fortunes in history. It has also destroyed many of them. The lesson for investors is simple: A great company does not necessarily make a great investment.
Can a Stock Really Lose 45 Percent in Just 4 Weeks?
SanDisk became one of the hottest semiconductor stories following its relisting in mid-2025. At one stage, the stock had risen roughly 50-fold from its relisting price, attracting tremendous enthusiasm from investors eager to capitalize on the AI revolution and the seemingly endless demand for data storage.
The investment narrative appeared compelling. Artificial intelligence was driving unprecedented computing demand. Cloud infrastructure continued expanding. Digital storage requirements kept growing. Many investors concluded that SanDisk was positioned to become one of the biggest winners of the next technology supercycle.
Within weeks of reaching its all-time high for the year in June, SanDisk gave back a substantial portion of those gains. For investors who believed the rally would continue indefinitely, SanDisk’s approximately 45 percent decline from its record closing price of 2,335 on June 25 to its closing price of 1,278.23 on July 27 serves as a timely reminder that prudence, position sizing, and risk management are every bit as important as identifying promising technology companies.
The decline was not because SanDisk suddenly became a bad company. Rather, investors were reminded that memory semiconductors remain one of the most cyclical industries in the world. When memory prices rise, manufacturers expand production.
When too much supply eventually enters the market, prices fall. Profit margins compress. Stock prices often decline far faster than investors expect. The market has seen this movie before.
A view of a building where the facilities of U.S. semiconductor giant Micron are located in Shanghai, China, on May 22, 2023. Hector Retamal/AFP via Getty Images
Micron Technology: A 98 Percent Collapse That Shocked Investors
Many investors assume that large, established technology companies are relatively safe investments. Micron Technology proves otherwise.
Founded in 1978 and listed on the public market in 1984, Micron has survived multiple technology cycles and remains one of the world’s leading manufacturers of DRAM and NAND memory. Yet even this semiconductor giant experienced one of the worst stock market collapses in technology history.
From its peak during the technology bubble to its eventual bottom during the financial crisis, Micron declined approximately 98 percent on a split-adjusted basis. Think about what that means.
An investor with $1 million invested near the peak could have watched that investment shrink to approximately $20,000. The company did not disappear. Micron remained in business. It eventually recovered.
But investors who bought near the peak experienced losses that many never imagined possible. History reminds us that outstanding businesses can still become disastrous investments if purchased at the wrong valuation.
Could America’s Technology Giants Experience Another Major Pullback?
Today’s technology leaders continue to dominate global markets. Companies such as Apple, Microsoft, Nvidia, Amazon, Alphabet, and Meta have generated extraordinary wealth for shareholders.
But investors should remember that every market leader eventually faces challenges. Competition intensifies. Technology evolves. Growth slows. Valuations normalize.
History has repeatedly shown that even the strongest technology companies can experience corrections of 40 percent, 50 percent, or more. Some eventually recover. Others never reclaim their former glory. Retail investors often suffer the most.
Many individual investors become enthusiastic only after a stock has already appreciated dramatically. They read optimistic analyst reports. They watch financial television. They hear stories of friends making easy money.
Fear of missing out replaces disciplined investing. Unfortunately, many investors also concentrate too much of their portfolio in a single company or sector. When market sentiment changes, those concentrated positions can become financially devastating.
Wall Street has an old saying: “Investors lose their shirts.” The expression means exactly what it sounds like. Many people lose a substantial portion of their savings because they underestimate how quickly popular stocks can decline.
The logos of Google, Apple, Microsoft, Amazon, Meta, Nvidia, and Tesla. Public Domain
How Professionals Trade
Imagine two investors. Both purchase the same stock. One allocates 5 percent of his portfolio. The other allocates 60 percent. If the stock falls 80 percent, their experiences are completely different. The first investor suffers a setback. The second investor may permanently destroy years of accumulated wealth.
Professional investors understand that portfolio construction is often more important than stock selection. Risk management is not exciting. It rarely appears on financial television. But it is one of the greatest determinants of long-term investment success.
One of the best ways to survive multiple market cycles is diversification. Technology remains an important long-term investment theme. However, no single sector outperforms forever.
Successful investors often diversify across financials, healthcare, industrials, consumer companies, energy, utilities, and fixed income, allowing different parts of the portfolio to perform under different economic conditions.
Diversification does not eliminate losses. It reduces the probability that one mistake will permanently damage a lifetime of savings. Protecting the equity curve is often more important than chasing the highest possible return.
China’s Rising Chip Giant: A New Competitive Threat
On July 27, ChangXin Memory Technologies (CXMT, 長鑫存儲) debuted on the Shanghai Stock Exchange’s STAR Market, achieving a market capitalization of approximately $487 billion on its first trading day. CXMT focuses primarily on DRAM memory, placing it in direct competition with global leaders such as Micron Technology, Samsung Electronics, and SK Hynix.
Some market participants believe that CXMT’s blockbuster listing may have contributed to the sharp sell-off in U.S. semiconductor stocks that same day. While markets rarely move for a single reason, investors appeared increasingly concerned that the emergence of a well-funded Chinese memory-chip giant could intensify competition and place long-term pressure on profit margins across the global memory industry.
Investors have already seen a similar story unfold elsewhere. A decade ago, few believed China’s BYD could become a genuine global challenger to Tesla. Today, BYD has emerged as one of the world’s largest electric vehicle manufacturers and a formidable competitor in the global EV market.
One factor that distinguishes many of China’s leading technology companies is the significant role the Chinese state plays in supporting industries that it considers strategically important. Through industrial policies, financing, subsidies, research initiatives, and other forms of state support, Beijing has sought to accelerate the development of national champions in sectors such as semiconductors, electric vehicles, batteries, artificial intelligence, and renewable energy. Supporters argue that these policies have helped Chinese companies scale rapidly, while critics contend that they distort global competition.
At the same time, the rapid global expansion of Chinese technology companies has prompted broader discussions about data security and national security. Some governments and security experts have expressed concerns that connected vehicles manufactured by Chinese companies, including BYD, could collect large volumes of operational and location data. While there is no publicly established evidence that such vehicles are being used to track drivers’ movements on behalf of the Chinese government, the issue has become part of a wider international debate over data governance, cybersecurity, and the potential implications of connected technologies.
Whether CXMT follows BYD’s trajectory remains uncertain. However, investors should not underestimate China’s determination to build globally competitive semiconductor champions. Additional production capacity from a major new player could increase competitive pressure and place downward pressure on memory prices over time, affecting established companies such as Micron Technology and other memory-chip manufacturers.
The strategic role of state support, the global expansion of Chinese technology companies, and the growing debate over data security deserve a more detailed discussion. We plan to explore these important issues in a separate article to be published this fall.
Respect the Market
History teaches one consistent lesson. Markets are ruthless toward complacency. Micron once declined by approximately 98 percent. Intel fell more than 80 percent. Numerous technology leaders have experienced declines of more than 90 percent.
Many of these companies were household names, widely covered by Wall Street analysts and supported by prestigious investment banks that helped bring them public through IPOs. Their products changed the world. Their shareholders still experienced enormous losses.
The objective of investing is not simply to identify great companies. It is to build a portfolio capable of surviving inevitable market cycles. No one knows which technology company will become the next great winner. Likewise, no one knows which market darling may eventually become the next cautionary tale.
For retail investors, the message is clear. Own outstanding businesses. Respect valuation. Stay humble. Diversify across sectors. Manage position sizes carefully. Preserving capital is every bit as important as growing it.
In the end, successful investing is less about being right all the time and more about surviving long enough to let compounding work in your favor.
The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
