U.S. tech stocks came under heavy pressure on Friday, with semiconductor giants leading the decline as investors grew wary of artificial intelligence valuations and digested better-than-expected U.S. jobs data.The selloff was most severe in the chip sector, with the PHLX Semiconductor Index plunging 10.3%, its steepest one-day decline since March 2020. The decline followed a loss a day earlier after Broadcom’s quarterly profit failed to meet high market expectations for its custom AI chip business.The two-day rout wiped out about 12% from the semiconductor benchmark, wiping out about $1.3 trillion in market capitalization for U.S.-listed chipmakers.Nvidia fell about 6%, losing more than $300 billion in market capitalization. Micron Technology fell 13% and Marvell Technology fell 17%. Advanced Micro Devices fell nearly 11%. Broadcom itself fell 7.9% on Friday, extending its two-session decline to almost 20%.The sharp decline came just days after the semiconductor index hit an all-time high. Even after recent losses, the gauge remains up 73% this year.“There were a lot of people here blindly buying the push,” Dennis Dick, a self-trader at Triple D Trading, told Reuters. “I could have made money by blindly buying the best deals, but that ended today.”
Strong jobs report spooks investors
Tech stocks also dragged down the broader U.S. market. The Nasdaq Composite Index fell 1.4%, the S&P 500 Index fell 0.7% and the Dow Jones Industrial Average fell 81 points, or 0.2%.Investor sentiment was further impacted by new labor market data showing continued strength in the US economy. Employers added 172,000 jobs in May, about twice as many jobs as economists expected, according to the Labor Department.The strong jobs report fueled concerns that the U.S. Federal Reserve has less room to cut interest rates this year, pushing bond yields higher and weighing on stock prices.“The semiconductor sector was so overbought, that’s why we’re selling. I don’t think this is the end of the (semiconductor) bull market,” said Oson Kwon, chief equity strategist at Wells Fargo.
Iran war, oil prices increase uncertainty
Markets are also grappling with uncertainties related to the Iran war and its impact on the global economy. Despite concerns that artificial intelligence could reduce jobs, employment remains resilient this year following a slump in 2025.At the same time, rising energy costs continue to be a challenge. Benchmark U.S. crude oil is trading around $93 per barrel, while Brent crude is hovering around $95 per barrel. Both remain well above the levels of around $70 per barrel seen before the conflict began in late February.Oil prices remain high as the Strait of Hormuz, a key route for the world’s oil and gas shipments, remains effectively closed. The resulting disruption has raised concerns about inflation and slowing economic growth.U.S. and Iranian negotiators reached a tentative agreement last week to extend the ceasefire, but the deal has not yet been finalized. Lebanon’s developments are also clouding hopes for permanent settlement.
The global market has fallen off the rails of the AI boom.
The weakness in technology stocks spread across Asia, with several markets closing lower.South Korea’s Kospi fell 5.5% to 8,160.59 as tech giants came under pressure. SK Hynix and Samsung Electronics fell by 9.9% and 6.4%, respectively.Japan’s Nikkei Stock Average fell 1.3% to close at 66,588.12, with semiconductor-related stocks the biggest decliners. Tokyo Electron fell 6.6% despite data showing Japan’s real wages rose for the fourth consecutive month.Hong Kong’s Hang Seng Index fell 1.2%, and China’s Shanghai Composite Index fell 0.7%. Australia’s S&P/ASX 200 index fell 0.7%, Taiwan’s TaiEx index fell 1.3% and India’s Sensex index fell 0.3%. In contrast, European markets were trading in positive territory by midday. Britain’s FTSE 100 rose 0.5%, Germany’s DAX rose 0.2% and France’s CAC 40 rose 0.6%.
