AI stock sell-off

What happened: AI stocks experienced a broad sell-off from June 8 to 11, with key players like Nvidia, Marvell, and Alphabet losing significant value. The Nasdaq index opened 2% lower on June 11, and the S&P 500 was back to where it was five weeks ago. European tech stocks also plummeted due to the AI valuation reset and Middle East conflict.

Market impact: The AI sector faced a significant pullback, with semiconductor stocks leading the decline. Companies like AMD, Intel, and Qualcomm saw substantial losses. The sell-off was driven by a shift to risk-off mode, fading hopes for interest rate cuts, and a steep run-up in AI stocks' valuations making them more exposed to a pullback. Geopolitical tensions and hot inflation data also dented investor confidence.

What to watch next: Investors should closely monitor the upcoming earnings reports from AI chipmakers and tech companies, with Nvidia's Q2 earnings release on August 16 being a key catalyst. Additionally, the Federal Reserve's next policy meeting on July 26-27 will provide insight into the central bank's stance on inflation and interest rates, which could further impact AI stock performance. Lastly, the evolution of the U.S.-Iran conflict and its potential impact on global markets will be crucial to watch.