Global tech stocks tumble as inflation fears hit AI shares

The Nasdaq Composite fell 2.2% on Tuesday as investors dumped some of the market’s most expensive tech names, with Sandisk, Micron Technology and Arm each dropping more than 10% and Nvidia losing 4.15%. The Nasdaq 100 fell more than 3.2%, while the S&P 500 closed down 1.4%, the Russell 2000 slipped nearly 1% and the Dow ended 46 points lower.

Sticky inflation has revived concern that the Federal Reserve may keep rates elevated, and higher borrowing costs threaten the valuation premium attached to artificial intelligence leaders. Traders also worried that inflation tied to the Iran war and disruption around the Strait of Hormuz could feed through to energy prices and the broader economy, raising the odds of a more cautious Fed. For richly valued chipmakers and memory stocks, that means the cost of financing the AI buildout may rise just as investors are asking whether the spending will produce enough profit.

The latest move followed a June 5 rout, when the Nasdaq 100 plunged 4.7%, its worst day since April 2025, after a strong jobs report increased expectations that the Fed could raise rates. It also came after Monday’s decline, when the S&P 500 fell 0.37% and the Nasdaq Composite dropped 1.32%. Alphabet sank 5%, Amazon fell 4.8%, Meta Platforms lost 2.3% and Microsoft slid 3%, even as Micron rose almost 7% ahead of its quarterly results due Wednesday after the bell.

The pressure has not been limited to one company. Analysts have described the recent swings as a series of “gut check moments” for tech, as the market shifts from rewarding AI spending to demanding evidence that the capital outlays can produce outsized returns. Robert Edwards of Edwards Asset Management called the pullback a “gift for investors” and described the pattern as a “sawtooth pattern,” a sign that the sector’s run has become more volatile rather than uniformly broken.

Overseas, the retreat was even sharper in Asia, where chipmakers led losses in South Korea and the Kospi fell sharply from recent highs. Investors were also waiting for Thursday’s release of the May personal consumption expenditures price index, the Fed’s preferred inflation gauge, after last week’s hawkish meeting pushed expectations for a possible rate increase as soon as October. Tom Hainlin of U.S. Bank Asset Management Group said the U.S. economy still looked relatively strong because consumers were spending and businesses were expanding, but he said volatility remained elevated.