The cleanest way to see what is happening inside technology today is to line up two ETFs. The iShares Expanded Tech-Software ETF (IGV) is up 0.6%, while the ** iShares Semiconductor ETF** (SOXX) is down about 5.4%. Technology is the worst-performing sector today, yet software is green. That is rotation, not a sector-wide verdict.
The beneficiaries: Netflix (NASDAQ:NFLX | NFLX Price Prediction) is up 3.2%, Salesforce (NYSE:CRM) is up 3.8%, and Adobe (NASDAQ:ADBE) is up 4.6% near the end of the trading day. The selling is concentrated in AI hardware, with Micron (NASDAQ:MU) leading declines alongside Marvell (NASDAQ:MRVL). Micron is down 7.3%, Marvell is down 9%, Ciena is down 10%, and Teradyne is down 10%.
What Is Driving the Rotation #
Three catalysts converged. Anthropic told investors over the weekend that its annualized revenue run rate hit $65 billion at the end of July, and Reuters reported the company estimates 2028 revenue of $190 billion to $200 billion. Big numbers, but below the whispers circulating in Silicon Valley. On The All In Podcast, Gavin Baker discussed hearing Anthropic’s ARR was over $80 billion, and he and David Sacks said they believed Anthropic would exit next year at an ARR of $400 billion to $500 billion. When the actual number lands well short of what bulls had modeled, everything downstream of that demand curve gets repriced.
Second, The Wall Street Journal reported that nine top tech companies had some $3 trillion of off-balance-sheet commitments mostly related to AI, growing faster than traditional capex, which totaled about $600 billion over the past year. Those obligations were roughly triple what the same companies owe under outstanding leases and long-term borrowings, as disclosed in recent 10-Q filings.
Third, the 30-year Treasury hit a 19-year high today, with the benchmark 10-year at 4.68%. Higher discount rates plus a re-rating of AI demand is exactly the setup that produces sharp compression in long-duration hardware winners.
One-Year Returns Show the Divide #
The capital rotating into Netflix, Salesforce and Adobe today is coming out of positions that have multiplied. The table below makes the point viscerally.
| Stock | 1-Year Return |
|---|---|
| Netflix | -39% |
| Adobe | -28% |
| Salesforce | -21% |
| Marvell | +208% |
| Teradyne | +306% |
| Ciena | +390% |
| Micron | +738% |
Each rotation beneficiary has been sold on the thesis that generative AI erodes its business model. Netflix is down 19% year to date, Salesforce is down 28%, and Adobe is down 27%. Yet the fundamentals have not collapsed. Netflix Q2 revenue grew 12% year-over-year, and management raised full-year 2026 guidance to 13-14% top line growth. Salesforce posted $11.13 billion in Q1 revenue, up 13%, with combined AgentForce and Data360 ARR at $3.4 billion.
Adobe delivered $6.62 billion in Q2 revenue, with AI-first ARR exceeding $500 million and growing 4x year-over-year. In other words, these are profitable large caps with their own AI monetization stories, trading at prices that reflect maximum skepticism.
Valuation reinforces the setup. Netflix trades at a trailing P/E of 25x, Salesforce at 23x, and Adobe at 15x. All valuations are reasonable; if stocks in these spaces can continue performing, there is upside to be had.
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