A two-day slide in technology stocks erased roughly $1.3 trillion in market value as investors reassessed the durability of the AI infrastructure spending boom.
The selling intensified on Tuesday with the Nasdaq Composite falling 2.2% at one point and South Korea's Kospi index dropping sharply from recent record highs. Chip stocks led the retreat: Micron Technology fell 13.2% to $1,051.77, AMD slid 8%, and Nvidia — the single largest AI infrastructure beneficiary — lost approximately $300 billion in cumulative market value during the two-day rout.
The immediate catalyst was a weaker-than-expected revenue forecast from Broadcom, whose AI chip guidance disappointed analysts who had priced in aggressive growth assumptions. The selloff was amplified by reports that Nvidia's H20 chip, a version modified specifically for the Chinese market, is facing new export restrictions from the U.S. government. Together the two developments undermined the central assumption that has driven AI stocks higher throughout 2026: that demand for specialized AI accelerators would continue expanding at a pace that justifies sky-high valuations.
The scale of damage was substantial. By Tuesday's close, the Nasdaq had pulled back more than 5% from its peak on June 2, snapping a 30%-plus rally that began in early May. Analysts at BNP Paribas described the volatility as beginning to snowball, a signal not merely that valuations are high but that institutional investors are now broadly reducing exposure to the AI sector simultaneously rather than selling selectively.
Market data firm Intellectia estimated that chip stocks alone lost $1.3 trillion in market value, encompassing Nvidia and AMD but also memory manufacturers such as Micron and Sandisk, which had posted triple-digit percentage gains in the first half of 2026. Samsung Electronics in South Korea was among the Asia-Pacific names hardest hit, with foreign investors selling more than $958 million worth of shares in a single session as the won weakened against the dollar.
The broader market reaction was mixed. The Dow Jones Industrial Average was relatively stable by comparison, and European equities opened little changed Wednesday morning as investors assessed whether the selling had reached a trough. Nasdaq-100 futures were up roughly 0.6% in premarket trading Wednesday, suggesting at least a short-term stabilization attempt was underway.
Several analysts cautioned against reading the selloff as proof that the AI boom is over. Morningstar noted that enterprise and hyperscaler AI infrastructure spending is still growing and short-term valuation resets are normal in a fast-growing sector. Others disagreed. NYU Stern professor Damodaran argued that the AI sector is pricing in future revenue two decades forward, a compression that leaves little margin for error when demand growth moderates.
The debate now centers on how long elevated estimates hold. If the Broadcom guidance miss reflects a genuine slowdown in hyperscaler capital spending plans rather than a quarter mismatch, the selloff could extend beyond chip stocks into broader software and services names that rallied alongside them. For now, the market is waiting for Micron's earnings report Wednesday evening as a narrow read on whether AI infrastructure spending continues to match expectations.
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