US Stocks Close: Nasdaq Slumps 4.18%, Philadelphia Semiconductor Index Falls Over 10%, AI Investment Sentiment Continues to Recede

Tradingkey - On June 5, AI investment sentiment continued to recede as the three major U.S. stock indices suffered heavy losses, with technology stocks leading the broader market lower.

At the close, the Dow Jones Industrial Average fell 1.35% to 50,866.78; the S&P 500 Index dropped 2.64% to 7,383.74; and the Nasdaq Composite Index fell 4.18% to 25,709.43.

Tech stock performance

SanDisk (SNDK) closed down 11.39% at $1,559.32.

Market rumors suggest that Nvidia may reduce the standard SOCAMM memory configuration for its Rubin NVL72 platform, with total capacity per rack being scaled back from 55TB to 28TB. This reduction in memory allocation for computing machines under the new architecture has triggered concerns regarding memory demand.

Broadcom (AVGO) continued its slide, falling 7.92% to $385.73, bringing its two-day decline to 19.51%.

BofA Securities stated that Broadcom's second-quarter results were only slightly above market expectations, but the firm emphasized that critical absolute AI growth remains on track for a YoY increase of approximately 180% in FY2026 and nearly 100% in FY2027. Despite high expectations (considering strong TPU growth momentum), management did not raise its previous FY2027 AI revenue target of approximately $100 billion, which the bank believes reflects a conservative stance due to ongoing supply constraints on the client side. Meanwhile, several new custom XPU customers (Anthropic, Meta, OpenAI, and two others) are expected to ramp up in the coming quarters, potentially adding momentum to the strong Google TPU base.

Other tech giants fell across the board: Broadcom (AVGO) dropped 7.92%, TSMC (TSM) fell 6.68%, Tesla (TSLA) declined 6.56%, Nvidia (NVDA) shed 6.20%, Meta Platforms (META) slipped 5.51%, Amazon (AMZN) lost 3.06%, Microsoft (MSFT) fell 2.66%, Apple (AAPL) dropped 1.25%, and Alphabet (GOOG) dipped 0.98%.

The Philadelphia Semiconductor Index plummeted 10.26% to 12,220.76. All 30 components ended in the red, with Marvell Technology (MRVL) plunging 16.74%, Micron Technology (MU) falling 13.21%, Arm Holdings (ARM) dropping 12.84%, Intel (INTC) sliding 11.28%, ON Semiconductor (ON) declining 11.05%, and Qualcomm (QCOM) shedding 10.98%.

Chinese concept stocks were under broad pressure: Pony.ai (PONY) fell 9.83%, Baidu (BIDU) dropped 9.75%, Hesai (HSAI) shed 8.69%, Kingsoft Cloud (KC) declined 6.70%, TSMC (TSM) fell 6.69%, GDS Holdings (GDS) lost 6.16%, and NIO Inc. (NIO) slipped 5.80%.

Corporate News

Meta Reportedly Considering Share Placement to Raise Billions for AI Infrastructure Investment

According to a report by the Financial Times, influenced by Alphabet's successful $85 billion secondary offering, Meta is considering a share issuance to raise capital for AI infrastructure investment. Citing three people familiar with the matter, the report stated that Meta has not yet hired investment banks and may ultimately decide not to proceed with the plan.

Google Spends $920 Million Monthly to Purchase Computing Power from SpaceX

According to filings submitted by SpaceX on Friday, Google has entered into a cloud services agreement with SpaceX under which it will pay $920 million monthly for computing power through June 2029. Under the agreement, Google will pay the full monthly fee starting in October, with lower costs during the ramp-up phase prior to September. If SpaceX fails to provide access to Nvidia chips by September 30, Google may terminate the contract after a one-month grace period.

SoftBank CEO Masayoshi Son: OpenAI's Next-Generation Model Is Being Designed by AI

Masayoshi Son told CNBC that OpenAI's next-generation model is being designed by another AI model, marking a move toward "Artificial Super Intelligence." Son stated he confirmed this with OpenAI CEO Sam Altman and the company's engineers, noting that this trend will spread to all mainstream AI models and that human engineers' intelligence will eventually be insufficient to design next-generation models. He explained that when AI can self-iterate to generate more intelligent models, its capabilities will exceed those of humans exponentially, which is the definition of super intelligence.

Trump Says U.S. Still Considering Sale of Stakes in Fannie Mae and Freddie Mac

Trump stated that the government is still considering an IPO for Fannie Mae and Freddie Mac, though there is no rush to proceed. Trump made these remarks during an interview with reporters aboard Air Force One on Friday. Throughout his term, his stance on the two mortgage giants has vacillated; he invited banks to submit proposals last year and had previously come close to a decision but did not move forward.

Industry & Macro News

U.S.-Iran peace talks hit a stalemate as traffic through the Strait of Hormuz falls to nearly zero

According to Bloomberg, commercial traffic through the Strait of Hormuz is limited to just a few vessels as peace negotiations between the U.S. and Iran show little sign of progress. Ship-tracking data compiled by Bloomberg indicated no commercial voyages were observed Friday morning, following three in each direction on Thursday.

Fed Official: Rate Hikes May Soon Become Appropriate

Cleveland Fed President Beth Hammack said the labor market has broadly balanced and that rate hikes may soon be appropriate if current trends persist. She noted that a 4.3% unemployment rate meets her definition of full employment; keeping rates steady is reasonable for now due to economic uncertainty.

Trump: Hopes to See Rate Cuts but Will Defer Decision-Making to Warsh

Speaking on Air Force One today, President Trump said he would like to see interest rates lowered but will leave the decision to Fed Chair Warsh. Trump noted that the country is in good shape and markets should rise. He added that he does not mind if Warsh cuts rates and will defer to him regarding a potential cut at the October meeting.

U.S. May Nonfarm Payroll Data Significantly Beats Market Expectations

Nonfarm payrolls grew by 172,000 in May on a seasonally adjusted basis, far exceeding the market expectation of 85,000. The unemployment rate remained at 4.3% for the second straight month, matching expectations. Furthermore, job gains for March and April were revised up by a combined 93,000, bringing the three-month employment growth to its strongest level in more than two years.