The artificial intelligence trade, the most crowded bet on Wall Street, has hit a wall. On June 5, the Nasdaq Composite dropped 4.18% - its steepest one-day loss since April 2025. Across the Pacific, South Korea’s KOSPI index collapsed nearly 10% from its peak by June 23, triggering circuit breakers and wiping out more than $1 trillion in total market value.
Two catalysts combined to fuel the selloff. Chipmaker Broadcom issued AI-related product guidance that fell short of market expectations. At the same time, the May U.S. jobs report showed employers added 172,000 positions, more than double the forecast, signaling the Federal Reserve is unlikely to cut interest rates soon. Higher rates hurt growth stocks that depend on cheap capital.
Nvidia fell more than 6%, Broadcom slid almost 8%, and the S&P 500 dropped 2.64%. In Seoul, memory-chip giants Samsung Electronics and SK Hynix each plunged more than 10%, shattering their year-to-date rally of roughly 80%.
Analysts are drawing comparisons to the late-1990s dot-com bubble. Companies have spent tens of billions on AI infrastructure, but Broadcom’s guidance suggests the payoff may not be as rapid as investors expected.
For crypto investors, the connection is clear: tech stocks and digital assets often move together during risk-off events. If the Fed delays rate cuts, the liquidity that has buoyed both markets could tighten, pressuring crypto-adjacent companies.