Nasdaq Sinks 2% on Broad AI-Led Selloff

After a strong recent run, major U.S. equity indexes retreated sharply on Friday, with selling pressure intensifying across the market. AI-related stocks emerged as the primary drag in the latest pullback.

The $Dow Jones Industrial Average (.DJI.US)$, which earlier in the session was on track to post its largest three-day outperformance versus the Nasdaq since March 10 and reach fresh record highs, reversed course and ended down 283 points, or 0.6%. At the same time, the S&P 500 fell 1.3%, while losses in the Nasdaq Composite widened to 2%, highlighting a broad tech-led selloff, with $Broadcom (AVGO.US)$ down 11%, $Micron Technology (MU.US)$ falling 6%, $Advanced Micro Devices (AMD.US)$ sliding 5%, $Palantir (PLTR.US)$ off 4%, and $NVIDIA (NVDA.US)$ down nearly 3%.

Rising Rates and Inflation Expectations Add Pressure to Risk Assets

Macro conditions also weighed on risk sentiment. The yield on 10-year Treasury Inflation-Protected Securities (TIPS), a key gauge of inflation expectations, rose to 1.896% from 1.83% a day earlier, signaling renewed inflation concerns. Meanwhile, the 30-year U.S. Treasury yield, which had largely remained below 4.8% over the past three months, climbed below 4.86%. Rising yields imply falling bond prices and pose additional challenges for high-valuation growth stocks.

Some Federal Reserve officials who dissented from this week's policy decision warned that inflation remains too elevated to justify rapid rate cuts, particularly given the limited availability of recent inflation data.

AI Profitability Concerns Intensify, Broadcom Earnings Spark Selloff

The shift in market sentiment was closely tied to developments in the AI sector. According to Reuters, Broadcom's latest earnings report reignited concerns over a potential AI-driven investment bubble. While the company projected strong quarterly revenue, it cautioned that margins on AI system sales could narrow, prompting investors to reassess the long-term profitability of surging AI investments.

Broadcom shares slid more than 8% at one point, dragging the broader semiconductor sector lower. AMD fell about 1%, while the Philadelphia Semiconductor Index declined 1.5%. A day earlier, $Oracle (ORCL.US)$ issued a weak forecast, adding to pressure on cloud computing and AI-linked stocks.

Separately, Bloomberg reported that Oracle has delayed the completion of a data center project being developed for OpenAI, further fueling concerns that the pace of AI infrastructure expansion may be slowing. Oracle has not commented on the report. Oracle denied the report, saying there have been no delays to any sites required to meet its contractual commitments and that all milestones remain on track.

Markets Enter Short-Term “Repricing” Phase

Overall, amid mounting uncertainty surrounding AI investment returns, margin sustainability, and the macro interest-rate environment, U.S. equities—particularly AI-related stocks—appear to be entering a short-term repricing phase. While liquidity conditions remain supportive over the medium to long term, near-term volatility risks are rising sharply.

@TigerStars  @CaptainTiger  @TigerWire  @Daily_Discussion  @Tiger_chat  @Tiger_comments  @MillionaireTiger