Stop me if you’ve heard this before: An AI-linked company crushed earnings forecasts, but investors weren’t impressed and the stock sank anyway. It turns out that the market was more focused on the company’s extravagant spending plans.

A tough shot, right? Well, it’s been happening with some regularity, including twice this month. Taiwanese chipmaker TSMC rang its bell Thursday with a 6% drop in the company’s U.S.-listed ADRs.

In a bygone era, TSMC’s beat-and-raise would have been a trap for investors. But in this new period of capital spending skepticism, rising AI spending forecasts have gotten all of their (negative) attention.

The situation showed something that has been true for a long time in the market: You will be punished more for overspending than for beating profit forecasts.

Samsung also discovered last week that the best of a company may not be enough for investors right now. The record profits and dizzying growth forecasts were roundly ignored by traders, who chose to sell the news.

Unfortunately for chip investors in general, when one company’s earnings disappoint, the entire sector suffers.

Previously, that wasn’t a problem. Chip stocks would regain their momentum and rebound in no time. The problem now is that these events are happening more frequently and the group has no time to recover in between.

The result is what you see in the chart below: deep drops for the Philadelphia Semiconductor Index (SOX) and the Roundhill Memory ETF (DRAM) since June 22.

The chart also shows the outperformance of the Magnificent 7, which contains the largest hyperscalers on the market, over the same period. The takeaway? A months-long period of chipmaker dominance over hyperscalers is unraveling in real time.

But wait, weren’t hyperscalers the ones that drew the ire of investors for spending too much last quarter? Yes, but judging by these latest episodes, spending sensitivity increases when valuations are stretched. And there is no area more pressured than that of chipmakers, particularly in the memory space. Meanwhile, hyperscalers have been left behind.

Those conditions are conducive to a rotation. In this case, it’s back to a relative status quo where hyperscalers are king. Two of the biggest gains since June 22? Meta and Microsoft.

The next chapter will be determined by the current second-quarter earnings season, which will accelerate for chipmakers and technology in general through late July and early August.

Listed below are the key reports to watch in the coming weeks, sorted by date. July 29 in particular is shaping up to be a Super Bowl of sorts with AI gains. And remember, when you’re examining the results, nothing else will matter if the expense is too high. If so, look below.

Chip manufacturers

• July 23: Intel
• July 28: Seagate
• July 29: Lam Research, SK Hynix, Arm Holdings, Qualcomm
• August 4: AMD
• August 5: SanDisk

Hyperscalers

• July 22: Alphabet
• July 29: Microsoft, Meta
• July 30: Amazon