A sweeping sell-off struck artificial intelligence stocks on Friday, erasing recent gains as a stronger-than-expected jobs report rattled investor confidence across the tech sector.
Nvidia (NASDAQ: NVDA) dropped 6% on the day, while Intel (NASDAQ: INTC) fell 11% as markets digested the implications of a labor market running hotter than anticipated.
Nebius (NASDAQ: NBIS) declined 12% and Arm Holdings (NASDAQ: ARM) shed 13%, reflecting broad-based pressure on semiconductor and AI-adjacent names.
Marvell Technology (NASDAQ: MRVL) suffered the steepest losses among the group, tumbling 16% as elevated valuations left the stock highly exposed to any shift in sentiment.
The primary catalyst was a May nonfarm payrolls report that showed U.S. job growth rising to a seasonally adjusted 172,000, more than double the consensus analyst estimate of 80,000.
That figure significantly complicates the Federal Reserve’s path toward cutting interest rates, since reducing borrowing costs in a low-unemployment environment risks stoking inflation and overheating the economy.
Many investors had been counting on a resolution to Middle East tensions, lower energy prices, and easing inflation to give the Fed room to bring rates down, but Friday’s data dashed those expectations.
Growth stocks like AI names are especially vulnerable to rising rate fears, as a larger share of their perceived value depends on future earnings that become less attractive when discounted at higher rates.
The sell-off arrived after a week of extreme volatility, during which a few remarks from Nvidia CEO Jensen Huang were enough to push Marvell up more than 30% in a single trading session.
That kind of momentum-driven surge illustrated just how stretched valuations across the AI sector had become, leaving stocks with little margin for error when sentiment soured.
Alphabet’s $80 billion equity offering also served as a reminder to investors that scaling artificial intelligence infrastructure carries an enormous price tag that can weigh on returns.
Broadcom’s quarterly results added further caution, demonstrating that even a leading AI chipmaker can struggle to satisfy Wall Street’s elevated expectations in the current environment.
The rapid swing from euphoria to anxiety across the AI trade underscores how fragile sentiment-driven rallies can be when macroeconomic realities reassert themselves.
