Tech selloff hits chip stocks after Broadcom, strong jobs

U.S. technology shares fell after Broadcom issued weaker forward guidance and a stronger-than-expected May nonfarm payrolls report raised concerns about higher interest rates. Chip names were the worst hit as investors reduced exposure ahead of several major initial public offerings and a Federal Reserve meeting next week.

Broadcom reported a first-quarter result that beat analyst estimates but warned that future growth would slow. The company’s guidance sparked an initial market reaction that was amplified when Friday’s payrolls data came in above expectations. The stronger jobs print increased the probability that the Federal Reserve could keep policy tighter for longer, and some market participants priced in the possibility of an additional 50 basis points of tightening by year-end. A few months earlier, markets had expected rate cuts to begin in 2026.

High-growth technology and semiconductor stocks are sensitive to changes in expected borrowing costs. Traders booked gains after a rapid rally in the chip sector that began in late March, and several attempted rebounds were followed by renewed selling, suggesting subdued buying demand so far.

Chip leaders that recovered earlier this year included Nvidia, Super Micro Computer and Taiwan Semiconductor Manufacturing Company. Other chip stocks posted large gains in recent months: Advanced Micro Devices rose about 167%, Micron Technology gained roughly 240%, and Marvell Technology Group climbed about 283% in a little over two months. Those moves prompted some investors to take profits.

Market participants also cited upcoming listings as a factor in the recent rotation. The SpaceX IPO is scheduled for June 12, and offerings from artificial intelligence firms are expected later in the year. The potential for significant inflows into those deals has led some investors to shift cash out of liquid tech positions.

The Federal Reserve meeting next week will be the first under Chair Kevin Warsh. No change to the target federal funds rate is expected at that meeting, but Warsh will hold a post-meeting press conference and the committee will publish its quarterly Summary of Economic Projections. The projections will show officials’ forecasts for interest rates, inflation, growth and unemployment and provide the first public view of the new leadership’s policy outlook.

Inflation trends and geopolitical tensions in the Middle East were mentioned by analysts as factors affecting price dynamics and policy decisions. Investors and policymakers will monitor incoming data and the Fed’s projections for signals on the likely path of monetary policy and the implications for the tech sector.