The AI trade, which has been the single most crowded bet on Wall Street for the better part of two years, just hit a wall. The Nasdaq Composite dropped 4.18% on June 5 to close at 25,709.43, its worst single-day performance since April 2025. Across the Pacific, the damage was even more severe, with South Korea’s KOSPI index collapsing nearly 10% from its peak by June 23, triggering circuit breakers as semiconductor giants cratered.

Losses across major indices have amounted to over $1 trillion.

What triggered the selloff

Two catalysts converged to create a particularly toxic cocktail for tech stocks. First, Broadcom issued AI-related product guidance that fell short of expectations. Second, the May jobs report showed 172,000 new positions added, more than double the roughly 80,000 that economists had forecast. A hot labor market means the Federal Reserve has less reason to cut interest rates, which is bad news for growth stocks whose valuations depend on cheap money stretching into the future.

Nvidia shares dropped more than 6%. Broadcom fell nearly 8%. The S&P 500 declined 2.64% on the same day.

South Korea takes the harder hit

The KOSPI had been on a remarkable tear, rising approximately 78-83% year-to-date before the correction hit on June 23. Samsung Electronics and SK Hynix, two of the world’s most important memory chip manufacturers, both plummeted more than 10%. Circuit breakers were activated to halt trading.

The dot-com comparison is getting louder

Analysts have started drawing parallels to the late 1990s dot-com era, when speculative excess drove technology valuations to levels completely detached from underlying business reality. Companies across the tech sector have been spending tens of billions on AI infrastructure, from data centers to custom chips to cooling systems. Broadcom’s guidance suggested that the translation from spending to revenue growth might not be as clean or as fast as the market had assumed.

What this means for crypto investors

Tech stocks and digital assets have shown meaningful correlation during periods of broad risk-off sentiment. The stronger-than-expected jobs report also has implications for monetary policy timelines. If the Fed delays rate cuts, the liquidity environment that has supported both tech stocks and crypto prices simultaneously could tighten. Many publicly traded crypto-adjacent companies, mining firms, exchange operators, and blockchain infrastructure providers trade in sympathy with the broader tech sector.