The Nasdaq Composite dropped 4.2% on June 5, marking its steepest single-day decline since October 2025. The culprits were familiar names: Nvidia, Broadcom, Alphabet, Amazon, and the rest of the trillion-dollar club that has spent the last two years convincing investors that AI would print money forever.

The damage report

The nine trillion-dollar tech companies in the S&P 500 lost an average of 5.3% in a single trading session. In dollar terms, that translates to roughly $1.1 trillion in market value evaporating, which is about the GDP of the Netherlands just vanishing between the opening and closing bells.

Semiconductor stocks bore the worst of it. Nvidia fell 6.2%, Broadcom dropped 7.9%, and Micron cratered 13.3%.

In the days that followed, the contagion spread deeper into Big Tech’s core. By June 21-22, Alphabet had fallen approximately 5%, weighed down by talent departures in its AI division. Amazon slid 4.8%. Meta gave back 2.3%.

What triggered the rout

The immediate catalyst was a stronger-than-expected jobs report for May. A hot labor market gives the Federal Reserve less reason to cut interest rates and more reason to consider raising them. For growth stocks that depend on cheap capital and distant future earnings, rising rate expectations are poison.

Layered on top of the rate concerns were growing doubts about AI spending. Cautionary guidance from semiconductor manufacturers added fuel to the anxiety. Geopolitical tensions related to Iran provided additional backdrop noise, nudging investors further into risk-off mode.

Crypto caught in the blast radius

The sell-off didn’t stay confined to equities. Bitcoin dropped below $60,000 on June 5, a level it hadn’t breached since October 2024. Ethereum fell alongside it.

Many of the same institutional investors hold both tech equities and crypto. When portfolio risk limits get hit, everything gets sold. Margin calls don’t discriminate between asset classes.

What this means for investors

The sell-off represents a potential inflection point in how markets price AI-related growth. Investors are no longer content with narratives. They want evidence that massive capital expenditures on AI are translating into revenue and earnings growth.

For crypto investors specifically, the correlation with tech equities means that any sustained downturn in the Nasdaq will likely create headwinds for Bitcoin and Ethereum. The interplay between rate expectations and risk assets is the key variable to watch.

Investors who are overweight both tech equities and crypto are effectively running concentrated risk in a single factor: appetite for high-growth, high-duration assets. The correlation means there’s nowhere to hide within that allocation.