On June 5th, the U.S. stock market experienced a near-warning level crash. On the surface, it seemed like three triggers ignited simultaneously, but in reality, it was a typical case of narrative backlash.

Let's start with the three lines:

1. Broadcom earnings report: performance was not poor, with AI revenue soaring 143% year-over-year, but next quarter's AI chip guidance was $1.2 billion below analyst expectations. The CEO also admitted that Google might bring in other suppliers. The market's reaction logic was simple—if even Broadcom's growth might slow, then the entire AI supply chain needs to be reassessed. The Philadelphia Semiconductor Index plummeted 10% in a single day, evaporating $1.3 trillion in market value.
2. Non-farm payroll data: 172k new jobs added in May, exactly double the expected number. Against the backdrop of rising oil prices (WTI above $92) due to the Iran war, this "too strong" employment report became toxic—market-implied rate hike probabilities surged from 50% to 73% overnight. Rising interest rates directly compressed tech stock valuations.
3. Iran war: since late February, the Strait of Hormuz has been blocked; although oil prices retreated from $110, they still remained above $90. This put the Federal Reserve in a dilemma and amplified any bad inflation-related data.

The three factors combined created a dangerous feedback loop: slowing AI growth expectations, rising rate hike expectations, overvalued tech stocks being squeezed from both sides, and capital flowing into bonds and small caps.

But note one detail: the Russell 2000 rose 1.45% against the trend that day. The market was not panicking to the point of indiscriminately selling everything; it was merely re-pricing the part of the AI story that had been pushed to extremes.

This is not the bursting of an AI bubble, but a normal correction when the "infinite growth narrative" encounters real-world limits. Broadcom's 143% growth is not enough; the problem is not the growth rate itself, but that the entire sector's valuation is based on the assumption of "exponential growth never slowing." Once there are signs of even a slight slowdown, valuations must be collectively reassessed.

The tide is still there, just not rising as fast. But for those fully invested and chasing highs, this correction is already heavy enough. $MU ‌$CL ‌