New York — The Nasdaq fell 3.7% Friday afternoon, dragged down by a broad selloff in artificial intelligence-linked stocks as a stronger-than-expected jobs report dimmed hopes for a Federal Reserve rate cut and cautious corporate forecasts rattled investor confidence in the AI trade.
At 2:35 p.m. in New York, the S&P 500 was down 2.2% and the Dow Jones Industrial Average shed 0.97%. Market volatility, as measured by the VIX index, spiked 25%.
The damage was concentrated in semiconductors and software. AMD and Oracle each fell more than 10%, while Nvidia dropped 6%, Marvell tumbled 13.6%, Micron slid 11.5%, Qualcomm lost 10%, and Intel fell 9.6% — all names that had posted significant gains in recent weeks.
Analysts pointed to two triggers. The first was May’s U.S. jobs report, which showed the economy added 172,000 jobs — more than double the 85,000 analysts had forecast — while the unemployment rate held at 4.3%. The strong labor market data, combined with lingering inflation concerns and uncertainty over the ongoing Middle East conflict, increased the likelihood that the Fed will hold rates higher for longer, or even raise them later this year.
High-growth tech stocks are particularly sensitive to elevated interest rates. As the Wall Street Journal noted, rising bond yields compress the value investors assign to companies whose profits are projected far into the future — a category that includes most of the AI sector’s biggest names.
The second trigger was Broadcom. The chipmaker fell 12.6% Thursday after holding its 2027 AI chip sales forecast steady rather than raising it, despite strong demand and a recent deal with Google. It dropped another 6.8% Friday, signaling that even solid fundamentals may no longer be enough to satisfy the lofty expectations baked into AI stock valuations.
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