Shares of XLK slid 2.5% to $191.32 on June 4 as a potent combination of post-earnings semiconductor profit-taking and climbing Treasury yields forced investors to rethink how much they're willing to pay for tech's future earnings. XLK Slides 2.5% as Broadcom's "Good Enough" Quarter Triggers a Chip Selloff — Is the AI Premium Starting to Crack?
Shares shifted sharply lower across the tech sector on June 4 as Broadcom's post-earnings stumble collided with rising bond yields and a market suddenly eager to take profits on its hottest AI bets. XLK, the $90 billion+ tech sector ETF heavily concentrated in semiconductors (~48% of holdings), fell 2.5% to $191.32, erasing most of its prior week's gains.
Broadcom Beat Expectations — and Still Got Punished
Broadcom reported Q2 revenue of $22.19 billion, up 48% year-over-year, but the stock slid after guidance fell short of investor expectations.
AI chip sales hit $10.8 billion — up 143% — yet the Q3 AI revenue target of $16 billion came in below the $17.2 billion Wall Street wanted.
Shares dropped roughly 15% on disappointment that CEO Hock Tan didn't raise the full-year $100 billion AI chip sales target. For XLK holders, this is a warning: when expectations are sky-high, merely meeting them can trigger punishing selloffs across the fund's biggest weights.
Rising Yields Make Future Tech Profits Worth Less Today
The 10-year Treasury yield hovered around 4.48% after climbing on stronger-than-expected labor data.
Markets now price in an 85% chance of a Fed rate hike by year-end, up from 60% a week ago. Higher yields act as gravity on stocks whose value depends heavily on profits years into the future — exactly the kind of companies that dominate XLK. Because Treasury yields serve as the discount rate for future earnings, rising rates mechanically reduce what investors will pay for high-growth stocks today.
The Semiconductor Selloff Spread Fast and Wide
Intel, AMD, Arm, and Marvell all fell more than 3% premarket, while
memory names Micron and SanDisk tumbled 6% and 4% respectively.
By midday the Philadelphia Semiconductor Index had fallen 5%, confirming a broad sector rout. With semiconductors representing nearly half of XLK's portfolio, there was nowhere to hide.
Money Is Rotating Into the "Old Economy"
The S&P 500 is showing a classic case of sector rotation, with capital flowing into energy, industrials, and materials while growth lags. XLK is up roughly 32–33% year-to-date, but at these valuations, merely good results may no longer be good enough. Investors banking on AI-driven earnings growth now face a market demanding proof — not promises — that the spending boom will translate into sustained profits.