Tech Rally Fizzles as Nasdaq Futures Drop 1.2%, Potentially Ending Wall Street's Nine-Week Winning Streak
Taylor Wilson
AI trade enthusiasm cooled sharply on Friday — Nasdaq 100 futures fell 1.2% and the S&P 500's nine-week winning streak is on the verge of snapping, pressured by Broadcom's earnings miss, an Asian tech selloff, and stubbornly high Treasury yields. Next week's payrolls and the Fed meeting will set the market's next direction.
What triggered this selloff?
The immediate catalyst: Broadcom's earnings missed expectations, forcing markets to re-examine whether AI investment enthusiasm can last.
But the pressure is broader: U.S. Treasury yields remain elevated and Middle East tensions are unresolved, both weighing on risk appetite.
S&P Dow Jones Indices announced it will not fast-track large-cap companies into the S&P 500 — SpaceX, Anthropic, and OpenAI must still wait at least a year post-IPO before index inclusion.
This means → these high-profile names cannot tap passive-fund buying in the short term; the "index dividend" on listing day is delayed.
Why did Asian markets fall even harder?
South Korea's KOSPI plunged 5.5%; SK Hynix dropped nearly 10%, Samsung Electronics fell over 6%.
Japan's Nikkei 225 closed down 1.3%; Tokyo Electron and Advantest fell more than 6% and 5% respectively.
In plain terms = Asian chipmakers are the most tightly coupled to the AI supply chain — when the AI narrative cracks in the U.S., they take the first hit.
The Korean won hit its lowest level against the dollar since 2009. This signals capital is pulling out of high-beta Asian tech assets.
Is the AI bubble actually bursting?
The bearish case: billionaire investor Ray Dalio warned this week that markets show characteristics of a boom heading toward collapse.
AT Global Markets analyst Nick Twidale said AI bubble fears reignited once Broadcom's results landed.
The bullish case: Union Bancaire Privée managing director Vey-Sern Ling called this consolidation "long overdue" — Broadcom's miss simply gave investors sitting on large gains a reason to take profit. "This won't shake the longer-term investment thesis."
Ortus Advisors equity strategist Andrew Jackson echoed the view: a correction to recalibrate is "long overdue and still very much needed."
AI trade — healthy pullback or the start of a bubble burst?
BULL
Profit-taking, nothing more
Broadcom's miss was just a sell trigger; the long-term thesis is intact.
Correction was overdue
Multiple strategists say the market needed a reset long ago.
BEAR
Boom turning to bust
Dalio warns the pattern resembles historical bubble tops.
Asia already cracking
Korean and Japanese chip stocks dropped 5%-10% in a single day — a serious signal.
In plain terms = both sides have a point — the correction was overdue, but the depth and speed of contagion go beyond a normal 'healthy pullback' script.
What are the two key tests next week?
Test one: the May nonfarm payrolls report (Friday). Consensus expects 85,000 new jobs — a three-month low — with unemployment holding at 4.3%.
Sevens Report's Tom Essaye warned: if the labor market comes in too tight, it raises the odds the Fed hikes sooner than expected, hitting Treasury longs hard.
Test two: new Fed Chair Waller's first monetary-policy meeting. This is the market's first window into the new chair's policy leanings.
The same week brings Apple's WWDC (expected AI announcements) and SpaceX's IPO pricing. This means → whether the AI trade can rebuild consensus after earnings season may be answered within a single week.
Content is for reference only, not financial advice.