What’s going on here?
Tech shares tumbled this week, with major chipmakers Broadcom and Nvidia leading a global selloff as skepticism over artificial intelligence spending spooked markets.
What does this mean?
The shine has worn off tech—at least for now. Cautious forecasts from Oracle and Broadcom dealt a heavy blow: Broadcom shares plunged 12% after flagging slimmer profit margins, and Nvidia slipped as investors grew wary of sky-high AI valuations. Oracle’s outlook only deepened the sense of unease. At the same time, copper prices, often a signpost for industrial and tech demand, dropped over 3% from recent highs. But it wasn’t just a tech story: mixed economic signals, including the steepest rise in US jobless claims since 2020 and weak UK output, stoked nerves around growth. Central banks added to the uncertainty, with the Federal Reserve cutting interest rates by 25 basis points but hinting at a pause, while Europe and Japan weighed very different policy paths. Government bond yields pushed higher in the US and Germany, amplifying investor concerns over where things go from here.
Why should I care?
For markets: Tech sector tests nerves.
The market’s recent gains have leaned heavily on tech, especially chipmakers. Broadcom’s stumble and renewed skepticism toward pricey AI stocks have triggered a broad pullback, making investors rethink their risk appetite. Copper’s slip adds to the evidence that bets tied to both high-growth tech and cyclical industries might face more turbulence, while rising yields in the US and Germany reflect mounting uncertainty about growth and central bank moves.
The bigger picture: Global policy gaps complicate the outlook.
Central banks are charting separate courses: the Fed just paused after a cut, the Bank of England is considering easing, while the Bank of Japan could tighten. That makes for a tricky backdrop as weaker job data in the US and UK hints at slowing economies, even as sticky inflation lingers. Add in shifting global currencies and softer tech demand, and investors are facing a challenging mix that could shape markets for months to come.
