Wall Street closed with mixed results on Thursday as growing concerns over an artificial intelligence valuation bubble triggered a sharp sell-off in semiconductor stocks.
The tech-heavy Nasdaq Composite faced renewed selling pressure, dragging the index lower despite an initially optimistic start to the session.
Investors had begun the day in a risk-on mood, buoyed by signs of weakness in the US labor market that reduced expectations for a Federal Reserve rate hike.
However, the positive macroeconomic backdrop was quickly overshadowed by profit-taking in the technology sector, where high-flying AI-related names came under scrutiny.
The divergence highlights a growing tension in US equities: while softer economic data supports a benign interest-rate environment, investors are increasingly wary of stretched valuations in the AI supply chain.
The semiconductor sector, which has been a primary driver of market gains over the past year, is now facing a reality check as traders question the sustainability of current multiples.