U.S. Tech Rout Rattles Global Markets as AI Chip Stocks Lead Losses

The boom in AI capital spending has lifted chip-stock valuations and their weight in market indexes, leaving the sector more sensitive to growth expectations and interest-rate shifts. The U.S. added 172,000 nonfarm jobs in May, beating expectations and prompting investors to reassess the Federal Reserve's rate-cut path, with some even betting on rate increases. High-valuation technology stocks consequently became the first targets of the selloff.

U.S. stocks fell broadly on June 5, with the Nasdaq down 4.18% and the Philadelphia Semiconductor Index plunging 10.26%. About $1.3 trillion in market value was wiped out in one day, while NVIDIA fell 6.19% and Broadcom lost 7.92%. The selling spilled into Taiwan, where TAIEX futures plunged 3,006 points, or 6.65%, in overnight trading to close at 42,220, marking the largest single-day point decline on record. Cryptocurrencies also weakened.