The NASDAQ closed down nearly 4% on Friday, its worst daily performance in about 8 months, as trades hit the sell button on swathes of technology and AI-related shares.
Chipmakers and memory stocks were the biggest detractors, with names such as Micron and Nvidia driving the index lower. Micron has been one of the standout performers of 2026 as investors piled into the memory chip maker and its valuations surpassed $1 trillion. Nvidia has become the undisputed AI champion with a market cap that has exceeded $5 trillion and there are plenty of investors who won’t need asking twice to book gains.
But it wasn’t just Micron and Nvidia that tumbled. Neoclouds such as Nebius and CoreWeave plummeted, as did more established names like AMD and Intel.
Broadcom outlook spooks market
Last week, Broadcom spooked the market with a lacklustre earnings outlook. Despite comfortably beating estimates for its second quarter results, investors wanted more in terms of future earnings projections. The reaction in Broadcom’s shares – a 15% premarket decline – underscores the sky-high expectations investors have of AI-related firms, but also how quickly and severely the market is prepared to punish stocks that show any signs of weakness.
SpaceX IPO seen as a top
Investors are also looking for signs of exuberance to call a market top, and SpaceX’s $1.75 trillion IPO fits the bill. The company generated just below $20 billion in revenue in 2025, putting it on an eye-watering price-to-sales ratio that makes a mockery of traditional valuation methodologies.
Even though Morgan Stanley predicts SpaceX will generate $3.4 trillion in revenue by 2040, the IPO valuation has all the signs of a frenzy and traders getting ahead of themselves, which sometimes happens at a market peak.
SpaceX IPO sparks rotation
Elon Musk’s SpaceX is seeking to raise at least $75 billion in its IPO. This money has to come from somewhere.
There is a school of thought that the tech sell-off last week was, in part, driven by investors rebalancing their portfolios to free up cash to allocate to SpaceX. A logical source of this cash is the AI-related tech shares that have soared since OpenAI launched ChatGPT in November 2022. These are the names that were hit the hardest last week, sending the market into a tailspin.