• Morning: Strong jobs data, rising yields
• Midday: Chip and AI favorites hit hard
• Policy debates and inflation fears weigh
• Close: Painful day, strong year-to-date

Nasdaq Tumbles Over 4% Amid Sell-Off in Chip Stocks The Nasdaq Composite suffered its steepest fall in more than a year on Friday as investors rapidly pulled back from the chipmakers that have powered the artificial intelligence boom.

§Morning: Strong jobs data, rising yields

The sell-off began after a stronger-than-expected May jobs report pushed U.S. Treasury yields sharply higher, reviving expectations that the Federal Reserve may need to raise interest rates again. Higher yields threaten to make borrowing more expensive for fast-growing tech and AI companies, whose valuations rely heavily on future profits.

By mid-morning, traders were already bracing for what one outlet described as the Nasdaq’s 4% slide “as shares in chip and memory groups sink.”

§Midday: Chip and AI favorites hit hard

As the session wore on, selling intensified in semiconductor names at the center of the AI trade. Axios called it a “Chips sector bloodbath” that “drags Nasdaq down 4.2%,” marking the index’s worst session in 14 months. Nvidia dropped 6.2%, slipping below a $5 trillion market value, while Broadcom, which had unnerved investors with its AI chip revenue outlook earlier in the week, was down more than 13% for the week.

The PHLX Semiconductor Sector index plunged over 10%, with Marvell Technology, Micron, Intel and AMD all sliding, and even broader tech names like Meta fell sharply as investors reassessed the cost of massive AI build-outs.

§Policy debates and inflation fears weigh

The rout unfolded against a backdrop of intensifying policy debate in Washington over whether the U.S. government should take ownership stakes in major AI firms, including reported discussions involving OpenAI and senior Trump administration officials, as well as a proposal from Sen. Bernie Sanders for a 50% government stake in AI companies.

At the same time, some Federal Reserve officials see AI-related investment as stoking demand for labor and infrastructure more than boosting productivity so far, keeping inflation risks elevated even as price growth remains above target.

§Close: Painful day, strong year-to-date

By the closing bell, the Nasdaq was down roughly 4–4.2% on the day, yet still up 10.6% for the year, with Nvidia and Broadcom remaining solidly positive year-to-date despite the week’s pullback.

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