US tech stocks came under heavy pressure on Friday, with semiconductor giants leading the decline as investors grew cautious about artificial intelligence-fuelled valuations and digested stronger-than-expected US jobs data.The sell-off was most severe in the chip sector, where the PHLX Semiconductor Index plunged 10.3%, marking its steepest single-day fall since March 2020. The decline followed losses a day earlier after Broadcom’s quarterly earnings failed to meet the market’s elevated expectations for its custom AI chip business.The two-day rout erased roughly 12% from the semiconductor benchmark and wiped out around $1.3 trillion in market value from US-listed chipmakers.Nvidia shed about 6%, resulting in a loss of more than $300 billion in market capitalisation. Micron Technology dropped 13%, while Marvell Technology sank 17%. Advanced Micro Devices fell nearly 11%. Broadcom itself lost 7.9% on Friday, extending its decline over two sessions to almost 20%.The sharp retreat came just days after the semiconductor index reached a record high. Even after the latest losses, the gauge remains up 73% this year.“You’ve had a lot of people here that were just blindly buying the dip,” Dennis Dick, a proprietary trader at Triple D Trading told Reuters. “Blindly buying the dip had been winning you money, but that ended today.”
Strong jobs data rattles investors
Technology stocks also dragged broader US markets lower. The Nasdaq Composite fell 1.4%, while the S&P 500 declined 0.7% and the Dow Jones Industrial Average slipped 81 points, or 0.2%.Investor sentiment was further affected by fresh labour market data showing continued strength in the US economy. According to the Labour Department, employers added 1,72,000 jobs in May, roughly twice the number economists had expected.The stronger hiring figures added to concerns that the Federal Reserve may have less room to lower interest rates this year, pushing bond yields higher and weighing on equities.“The semiconductor sector was way overbought. That’s why we’re seeing the sell-off. I don’t think it’s the end of the (semiconductor) bull market,” said Ohsung Kwon, Chief Equity Strategist at Wells Fargo.
Iran war, oil prices add to uncertainty
Markets have also been grappling with uncertainty linked to the Iran war and its effect on the global economy. Despite concerns that artificial intelligence could reduce hiring, employment has remained resilient this year following a weak 2025.At the same time, elevated energy costs continue to pose challenges. Benchmark US crude traded at around $93 per barrel, while Brent crude hovered near $95 per barrel. Both remain significantly above the roughly $70 per barrel level seen before the conflict began in late February.Oil prices have stayed high as the Strait of Hormuz, a key route for global oil and natural gas shipments, remains effectively closed. The resulting disruption has heightened concerns over inflation and slower economic growth.Although US and Iranian negotiators reached a tentative agreement last week to extend a ceasefire, the arrangement has not yet been finalised. Developments in Lebanon have also clouded hopes for a permanent settlement.
Global markets off track AI boom
The weakness in technology shares spread across Asia, where several markets closed lower.South Korea’s Kospi tumbled 5.5% to 8,160.59 as technology giants came under pressure. SK Hynix dropped 9.9% and Samsung Electronics fell 6.4%.Japan’s Nikkei 225 lost 1.3% to close at 66,588.12, with chip-related shares among the biggest decliners. Tokyo Electron fell 6.6% despite data showing Japanese real wages rose for a fourth consecutive month.Hong Kong’s Hang Seng Index fell 1.2%, while China’s Shanghai Composite slipped 0.7%. Australia’s S&P/ASX 200 dropped 0.7%, Taiwan’s Taiex lost 1.3% and India’s Sensex declined 0.3%. In contrast, European markets were trading in positive territory by midday. Britain’s FTSE 100 rose 0.5%, Germany’s DAX gained 0.2% and France’s CAC 40 added 0.6%.
