US technology stocks came under heavy pressure on Friday, with semiconductor giants leading the decline as investors grew warier about artificial intelligence-fueled valuations and digested stronger-than-expected US jobs data.The sharpest sell-off was in the chip sector, where the PHLX Semiconductor Index fell 10.3%, marking its biggest single-day decline since March 2020. The decline followed losses the previous day after Broadcom’s quarterly earnings failed to meet rising market expectations for its custom AI chip business.The two-day rout wiped out nearly 12% of the semiconductor index and wiped out about $1.3 trillion from the market value of U.S.-listed chipmakers.Nvidia lost about 6%, resulting in a loss of more than $300 billion in market value. Micron Technology fell 13%, while Marvell Technology fell 17%. Advanced Micro Devices was down approximately 11%. Broadcom itself lost 7.9% on Friday, extending its two-session decline to nearly 20%.The sharp decline came just days after the semiconductor index reached a record high. Even after recent losses, the metric is still up 73% this year.
“There were a lot of people here who were blindly buying the dip,” Dennis Dick, a proprietary trader at Triple D Trading, told Reuters. “Blindly buying the dip used to make you money, but that ended today.”
Strong jobs data shakes investors
Technology stocks also pushed broader US markets lower. The Nasdaq Composite Index fell 1.4%, while the S&P 500 Index fell 0.7%, and the Dow Jones Industrial Average fell 81 points, or 0.2%.Investor sentiment was further influenced by new labor market data, which showed the continued strength of the US economy.
According to the Labor Department, employers added 1,72,000 jobs in May, nearly double the number economists had expected.The strong employment numbers heightened concerns that the Federal Reserve may have less room to cut interest rates this year, pushing bond yields higher and weighing on stocks.“The semiconductor sector was overbought. That’s why we’re seeing selling. I don’t think it’s the end of the (semiconductor) bull market,” said Osung Kwon, chief equity strategist at Wells Fargo.
The Iran war and oil prices add to the uncertainty
Markets are also facing uncertainty related to the Iranian war and its impact on the global economy. Despite concerns that artificial intelligence could reduce employment, employment has held up this year after weakening in 2025.At the same time, high energy costs continue to pose challenges. Benchmark US crude was trading at around $93 per barrel, while Brent crude remained near $95 per barrel. Both remain well above the roughly $70 per barrel level before the conflict began in late February.Oil prices remained high as the Strait of Hormuz, a major route for global oil and natural gas shipments, remained effectively closed. The resulting turmoil has heightened concerns about inflation and slowing economic growth.Although American and Iranian negotiators reached a preliminary agreement last week to extend the ceasefire, this arrangement has not yet been finalized. Developments in Lebanon also cast a shadow over hopes for a permanent settlement.
Global markets are off track for an AI boom
The weakness in technology stocks spread across Asia, with many markets closing lower.South Korea’s KOSPI fell 5.5% to 8,160.59, as tech giants came under pressure. SK Hynix fell 9.9% and Samsung Electronics fell 6.4%.Japan’s Nikkei 225 index fell 1.3% to close at 66,588.12, with chip-related stocks among the biggest losers. Tokyo Electron shares fell 6.6% despite data showing that Japanese real wages rose for the fourth month in a row.Hong Kong’s Hang Seng Index fell 1.2%, while China’s Shanghai Composite Index fell 0.7%. Australia’s S&P/ASX 200 fell 0.7%, Taiwan’s Taiex lost 1.3%, and India’s Sensex fell 0.3%. In contrast, European markets were trading in positive territory by midday. The British FTSE 100 index rose by 0.5%, the German DAX index rose by 0.2%, and the French CAC 40 index rose by 0.6%.