--- title: "Black Friday! The Global AI Bull Market of \"Everyone Making Money\" Takes a Heavy Hit" type: "News" locale: "en" url: "https://longbridge.com/en/news/288915875.md" description: "Strong non-farm payroll data on Friday ignited fears of interest rate hikes, while Broadcom's disappointing earnings guidance this week punctured the myth that \"AI beneficiary stocks are invincible.\" Additionally, Alphabet's follow-on offering, rumors of Meta Platforms following suit with financing, and expectations for a SpaceX IPO combined to create a capital siphoning effect. The global AI bull market, which had lasted for two months, suffered a severe blow, with the Philadelphia Semiconductor Index plunging more than 10% on Friday and over $1 trillion in market value evaporating in a single day" datetime: "2026-06-06T01:46:07.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/288915875.md) - [en](https://longbridge.com/en/news/288915875.md) - [zh-HK](https://longbridge.com/zh-HK/news/288915875.md) --- # Black Friday! The Global AI Bull Market of "Everyone Making Money" Takes a Heavy Hit U.S. stocks experienced one of the most brutal single-day sell-offs in recent years on Friday, as the AI-driven rally that had persisted for two months suddenly cooled. On Friday, the Nasdaq Composite plummeted by more than 1,121 points in a single day, marking the largest single-day point drop in history. The market capitalization of S&P 500 components evaporated by $1.8 trillion. According to Wallstreetcn, the May non-farm payroll data released on Friday was significantly stronger than expected, completely shattering the market's last hope for Federal Reserve rate cuts and rapidly intensifying concerns about rate hikes in 2026. Interest rate swaps indicate that **traders expect the Federal Reserve to raise the target federal funds rate by 0.25 percentage points at its December policy meeting.** **** In addition to the non-farm data vastly exceeding expectations, multiple catalysts this week jointly triggered a collective crisis of confidence on Friday: > - Broadcom's earnings guidance was disappointing, first puncturing the market belief that "all AI beneficiary companies are invincible." > - Alphabet conducted a large-scale follow-on offering to raise funds for capital expenditures. > - Meta Platforms is also considering following suit with a similar financing plan, further heightening investor concerns about equity dilution among tech giants. > - Furthermore, expectations for a SpaceX IPO further diverted market funds. ## Non-Farm Data Exceeds Expectations, Rate Hike Fears Resurface The May non-farm payroll report released on Friday showed a strong recovery in the labor market, becoming the direct trigger for this round of selling. Following the report's release, the interest rate swap market quickly fully priced in the expectation of a 25 basis point rate hike by the Federal Reserve within the year, **with the probability of a rate hike at the October meeting rising to approximately 60%.** The yield on the 10-year U.S. Treasury note rose by 7 basis points to 4.54%, and the 30-year yield returned above 5%; short-end yields were under the most pressure, with the 2-year yield rising by about 10 basis points. Tracy Chen, portfolio manager at Brandywine Global Investment Management, stated: > The employment data indicates that the labor market is recovering, and inflation should be the Federal Reserve's focus. **As the inflation rate approaches the unemployment rate level, the Federal Reserve may already be behind the curve.** Since the outbreak of the conflict involving Iran, the market has been gradually pricing in the possibility of rate hikes in 2026. The release of this strong employment data further compressed the space for the Federal Reserve to keep interest rates unchanged. Jose Torres of Interactive Brokers stated: > **Rising yields and falling oil prices—this means investors are worried that the Federal Reserve is going to raise interest rates.** The sudden shift in expectations for the Federal Reserve's policy path strengthened the U.S. dollar, with the U.S. Dollar Index recording its best single-day performance in two months, accumulating a gain of over 1% for the week and breaking through several key technical resistance levels again. ## Broadcom Earnings Puncture the AI "Moat" Myth The groundwork for this plunge was laid earlier in the week by Broadcom's earnings report. After Broadcom released its latest quarterly results, its guidance failed to meet market expectations, causing the previously surging semiconductor rally to begin losing momentum. (Broadcom's stock price plunged on June 4 after the earnings release) Steve Sosnick, Chief Market Strategist at Interactive Brokers, believes: > The trigger is never so obvious, but I think **Broadcom represents a shift in mindset.** The guidance was disappointing... I think it punctured many people's beliefs—**the belief that any company that might benefit from AI spending is invincible.** Previously, market sentiment was astonishingly optimistic. Since the beginning of the second quarter, memory and optical chip stocks led a strong but highly concentrated rally. Continuous breakthroughs in AI model capabilities revitalized investor confidence in the prospects of artificial intelligence, while hyperscale cloud providers' continued commitment to data center construction spawned huge supply bottlenecks for key components such as high-bandwidth memory chips. Taking Micron Technology as an example, its stock price accumulated a gain of over 200% from the end of March to this Thursday, with its market capitalization briefly surpassing $1 trillion, making it the 12th company globally to reach a trillion-dollar market cap. However, this parabolic surge came to an abrupt halt after Broadcom's results were released. On Friday, the Philadelphia Semiconductor Index plunged more than 10%, with over $1 trillion in market value evaporating in a single day, recording its worst single-day drop since March 2020. ## Alphabet and Meta Platforms Follow-On Offerings and SpaceX IPO: The "Siphon Effect" of Capital Arrives During the decline in Friday's late trading session, another piece of news further accelerated the downturn. According to the UK's Financial Times, Meta Platforms is considering emulating Alphabet by implementing a large-scale equity financing plan to meet its massive capital expenditure needs. Michael Kramer, founder of Mott Capital Management, stated: > Alphabet's recent equity issuance, combined with rumors that Meta Platforms may follow suit, **if these companies begin to issue large amounts of stock to finance capital expenditures, it could fundamentally change the market's investment logic for these companies.** Kramer further pointed out: > In the coming quarters, these companies are likely to face a dilemma: **meet spending needs through debt and follow-on offerings, or cut capital expenditures. Neither outcome is likely to be optimistic for stock prices.** According to previous reports by Bloomberg, the total scale of capital expenditures by tech giants for data center construction reached as high as $820 billion. The market previously viewed this figure as evidence of a boom in AI infrastructure investment. **Now, as the financing method shifts from internal cash flow to external follow-on offerings, the appeal of this narrative is quietly fading.** At the same time, the heating up of expectations for a SpaceX IPO has also sparked discussions about capital diversion in the market, further exacerbating investor doubts about overvalued expectations under the AI capital expenditure narrative. ## Two-Month Strong Rally Comes to an Abrupt Halt, Funds Flow to Defensive Sectors Bloomberg macro strategist Michael Ball pointed out that Friday's decline was more of a repricing of crowded AI capital expenditure leaders, with the Dow Jones Industrial Average only closing slightly lower for the week, indicating that the selling was concentrated in high-beta momentum stocks. Michael Ball analyzed that the highly crowded positions in the technology sector make any volatility prone to evolving into self-reinforcing selling. He said: > As economic growth shows greater resilience, the valuation premium enjoyed by long-term winners in AI capital expenditure should rightly bear lower multiples. **Furthermore, there were clear signs of a defensive shift in capital flows on Friday.** The consumer staples sector rose against the trend by 1.6%, with Coca-Cola's stock price rising 3.5% in a single day, becoming one of the few bright spots in the U.S. stock market on Friday. This divergent pattern shows that some investors have actively reduced their risk exposure, turning to defensive assets for shelter. SpotGamma defines the 7,500-point area as the current most critical risk watershed for the S&P 500: staying above this level, dealer hedging flows help slow the decline and promote mean reversion. **Once broken, forced selling at the individual stock level and the collapse of option skew could leave the index without support.** Analysis suggests that Friday may have been just the first chapter of this story. ### Related Stocks - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [AVGO.US](https://longbridge.com/en/quote/AVGO.US.md) - [META.US](https://longbridge.com/en/quote/META.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) - [PL.US](https://longbridge.com/en/quote/PL.US.md) - [SPCX.US](https://longbridge.com/en/quote/SPCX.US.md) - [RKLB.US](https://longbridge.com/en/quote/RKLB.US.md) - [SATS.US](https://longbridge.com/en/quote/SATS.US.md) - [.IXIC.US](https://longbridge.com/en/quote/.IXIC.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [IBKR.US](https://longbridge.com/en/quote/IBKR.US.md) - [MU.US](https://longbridge.com/en/quote/MU.US.md) - [KO.US](https://longbridge.com/en/quote/KO.US.md) ## Related News & Research - [Meta made its own AI-generated clickbait news feed](https://longbridge.com/en/news/288934190.md) - [3 Things Broadcom and Nvidia Investors Should Look for When Broadcom Reports Earnings on June 3](https://longbridge.com/en/news/288375251.md) - [Meta Delays New AI Model Again — What It Could Mean for Investors](https://longbridge.com/en/news/288678053.md) - [What Is Going On With Meta Platforms Stock On Wednesday?](https://longbridge.com/en/news/288607828.md) - [Broadcom (AVGO) Stock Is Soaring Today Ahead of June 3 Earnings. 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