U.S. markets closed lower on Friday, led by a sharp sell-off in artificial intelligence and semiconductor stocks. The Philadelphia Semiconductor Index plunged more than 6% during the session, while the Nasdaq Composite fell over 1.8%. The S&P 500 and Dow Jones Industrial Average also recorded significant losses.
Broadcom (AVGO) remained the central catalyst for the sector's decline. Although the company's Thursday earnings surpassed expectations, its sales guidance for AI chips failed to meet the market's exceedingly high hopes, sparking investor concerns about a potential slowdown in AI infrastructure investment. Following a 12.6% drop on Thursday, shares of Broadcom continued to face pressure in pre-market trading on Friday, dragging down the entire semiconductor supply chain.
Individual stocks suffered heavy losses. Arm and Marvell Technology plummeted more than 9%, while ON Semiconductor fell over 7%. Advanced Micro Devices (AMD) and Cisco Systems both dropped between 5% and 6%, as mentioned in the title. Additionally, Intel (INTC) and Qualcomm declined more than 6%, with memory giants Micron Technology and Western Digital also tumbling over 7%.
A "hawkish" macroeconomic signal intensified the selling pressure. The latest data showed U.S. non-farm payrolls increased by 172,000 in May, far exceeding market expectations of 88,000. The robust jobs data strengthened expectations for Federal Reserve interest rate hikes, with traders now fully pricing in the possibility of a rate increase before December. The risk of rising rates poses a significant headwind for high-valuation technology and growth stocks.
Analysts note that this pullback results from a confluence of "disappointing earnings guidance" and "concerns over tightening macro liquidity." Trading in the AI sector has become extremely crowded, making it vulnerable to sharp corrections on any negative news. However, some view this as a short-term correction within a longer-term AI super-cycle, with funds rotating out of chip stocks and into blue-chip sectors like financials and healthcare.
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