US equity markets closed in the red on Thursday, with the S&P 500 slipping 0.3% and the NASDAQ Composite falling 1.1%. The culprit: a brutal selloff in semiconductor and AI stocks that erased nearly $1 trillion in market value from chip names alone.

For crypto investors, the pain didn’t stay confined to Wall Street. Bitcoin fell in tandem with equities, a reminder that the “digital gold” narrative still takes a back seat to correlation math when tech stocks are getting hammered.

A strong jobs report, paradoxically, broke things

A robust US jobs report landed Thursday morning, and instead of cheering, traders started selling. Strong employment data means the Federal Reserve has less reason to cut interest rates, which is bad news for high-growth tech stocks whose lofty valuations depend on cheap money flowing freely. Profit-taking kicked in almost immediately across semiconductor and AI names. The NASDAQ’s intraday losses actually reached around 4% at their worst before recovering somewhat into the close. The S&P 500, more diversified and less tech-heavy, absorbed the blow with a comparatively modest 0.3% decline.

Broadcom was a notable casualty. The chipmaker’s shares dropped sharply after the company released weak guidance for the third quarter, adding fuel to an already nervous market.

Bitcoin follows equities down, again

Bitcoin’s correlation with the S&P 500 and NASDAQ has settled at approximately 0.5 in recent years. When tech stocks sneeze, Bitcoin catches a cold. Thursday was no exception. As equities slid, Bitcoin moved lower in lockstep. Bitcoin’s investor base overlaps significantly with the same risk-on crowd that piles into semiconductor and AI stocks. When that crowd heads for the exits simultaneously, everything they own gets sold together.

The $1 trillion question about AI valuations

Nearly $1 trillion vanishing from semiconductor stocks in a single session is the kind of number that forces a conversation about how much of the AI trade is built on actual revenue. Broadcom’s weak Q3 guidance is particularly telling. If one of the core infrastructure providers for AI workloads is signaling softer demand, it raises questions about whether the AI spending cycle is decelerating faster than bulls expected.

By June 8, a rebound had already begun, with bargain hunters stepping back into chip stocks. That quick recovery suggests the market still broadly believes in the AI thesis, even if it needed a moment to recalibrate expectations.

As long as Bitcoin maintains its roughly 0.5 correlation with tech-heavy indices, events like Thursday’s semiconductor rout will continue to ripple through digital asset portfolios. Diversification within crypto doesn’t help when the entire asset class is tethered to the same macro forces driving NASDAQ volatility.