Friday’s pullback: Renewed tech selling and a BaFin surprise

The Stoxx 600 fell from record levels on Friday as renewed worries about the rising cost of AI infrastructure drove a broad sell-off in global tech .

• Chipmakers slipped again. Infineon fell 3%, STMicroelectronics shed 2.4%, and ASML dropped 2.3% in early trading . BE Semiconductor and ASM International also declined .
• U.S. and Asian tech followed. SoftBank sank 11%. In premarket trading, Intel lost 2.6%, Arm fell 3.3%, and Micron — which had surged mid-week on blowout earnings — dropped 5% .
• Zalando slumped on a regulatory probe. Germany's financial regulator BaFin announced it had found "concrete indications" that Zalando violated accounting rules, launching a formal review of its consolidated 2025 financial statements . The probe, opened on June 19, relates to possible omissions in notes about a related-party transaction tied to its About You acquisition . Zalando shares fell roughly 7–17% on the news .

The Zalando story is company-specific, but it landed on a day when investors were already primed to sell, amplifying the negative tone in European equities .

The week’s real story: Tuesday’s $1.3 trillion tech rout

The decisive moment came Tuesday, June 23. The U.S. Semiconductor Index (SOX) plunged 7.9% from all-time highs . Global semiconductor stocks shed over $1.3 trillion in market value in a single session .

• Asia saw the worst of it. South Korea's tech-heavy Kospi plummeted 10%, triggering a brief trading halt . Samsung and SK Hynix each fell more than 12% .
• Major U.S. names were hammered. Nvidia dropped 3%, AMD sank 6%, and Micron slid over 8% in premarket trading .
• Europe wasn't spared. The Stoxx 600 fell 0.73%, with technology and basic materials each down at least 2.5% . ASML, Europe's most valuable company, lost roughly $38 billion in market value, sliding 5.2% . Infineon and STMicroelectronics declined 6.3% and 8% respectively .

The breadth of the selloff was striking. Every major chipmaker, on every continent, sold off simultaneously. The trigger? A combination of stretched valuations, fears that AI capital spending — enormous and growing — may not generate proportional returns, and a growing expectation that the Federal Reserve would deliver 50 basis points in rate hikes by year-end to fight persistent inflation .

The Micron rebound that didn’t stick

Mid-week offered a brief reprieve. Micron Technology reported blowout third-quarter earnings on Wednesday, initially lifting chip stocks . The surge was sharp but short-lived. By Friday, selling had resumed across tech globally . The message from the market was clear: a strong earnings report can still spark a rally, but investors are using those rallies to sell, not to buy more .

This pattern — a sharp selloff, a dead-cat bounce on good news, then renewed selling — is the hallmark of a market that has lost conviction in the multiples it previously awarded.

What this reveals about AI valuations and sentiment

The selloff is about price, not fundamentals. Multiple reports from the week explicitly state that the correction was driven by a reassessment of what investors should pay for AI-exposed stocks, not by deteriorating earnings or demand .

• Sky-high valuations are the core driver. Morningstar reported that investors were "balking at sky-high valuations in stocks linked to artificial intelligence" . The Stoxx 600 hit record highs and then fell from them in the same week — a classic sign of topping or rotational behavior .
• Rising cost concerns add pressure. Worries about the enormous capital spending required for AI infrastructure — and whether it will generate proportional returns — became a key overhang . Reports that Apple and Microsoft plan to raise prices also weighed on sentiment .
• Macro fears compound the unease. Expectations of imminent Fed rate hikes to fight persistent inflation provided an additional catalyst for profit-taking across rate-sensitive tech names . Market participants began pricing in 50 basis points in rate increases by year-end, a doubling of forecasts from just two weeks earlier .
• The pattern is fragile, not panicked. The selloff was aggressive but orderly. Strong earnings after Broadcom (early June) and Micron (mid-week) temporarily lifted stocks, but each rally was sold into . As Baird investment strategy analyst Ross Mayfield put it: "The trade has been highly concentrated and flow-driven, which makes it vulnerable to sharp reversals" .

In short: The market is in a valuation reckoning for AI stocks. Strong chip demand and blowout earnings are no longer enough to sustain elevated prices. Investors are demanding proof that massive AI capex will translate into durable, margin-protected profits — and they are punishing the names that can't provide it fast enough.

Friday’s pullback: Renewed tech selling and a BaFin surprise

The Stoxx 600 fell from record levels on Friday as renewed worries about the rising cost of AI infrastructure drove a broad sell-off in global tech .

• Chipmakers slipped again. Infineon fell 3%, STMicroelectronics shed 2.4%, and ASML dropped 2.3% in early trading . BE Semiconductor and ASM International also declined .
• U.S. and Asian tech followed. SoftBank sank 11%. In premarket trading, Intel lost 2.6%, Arm fell 3.3%, and Micron — which had surged mid-week on blowout earnings — dropped 5% .
• Zalando slumped on a regulatory probe. Germany's financial regulator BaFin announced it had found "concrete indications" that Zalando violated accounting rules, launching a formal review of its consolidated 2025 financial statements . The probe, opened on June 19, relates to possible omissions in notes about a related-party transaction tied to its About You acquisition . Zalando shares fell roughly 7–17% on the news .

The Zalando story is company-specific, but it landed on a day when investors were already primed to sell, amplifying the negative tone in European equities .

The week’s real story: Tuesday’s $1.3 trillion tech rout

The decisive moment came Tuesday, June 23. The U.S. Semiconductor Index (SOX) plunged 7.9% from all-time highs . Global semiconductor stocks shed over $1.3 trillion in market value in a single session .

• Asia saw the worst of it. South Korea's tech-heavy Kospi plummeted 10%, triggering a brief trading halt . Samsung and SK Hynix each fell more than 12% .
• Major U.S. names were hammered. Nvidia dropped 3%, AMD sank 6%, and Micron slid over 8% in premarket trading .
• Europe wasn't spared. The Stoxx 600 fell 0.73%, with technology and basic materials each down at least 2.5% . ASML, Europe's most valuable company, lost roughly $38 billion in market value, sliding 5.2% . Infineon and STMicroelectronics declined 6.3% and 8% respectively .

The breadth of the selloff was striking. Every major chipmaker, on every continent, sold off simultaneously. The trigger? A combination of stretched valuations, fears that AI capital spending — enormous and growing — may not generate proportional returns, and a growing expectation that the Federal Reserve would deliver 50 basis points in rate hikes by year-end to fight persistent inflation .

The Micron rebound that didn’t stick

Mid-week offered a brief reprieve. Micron Technology reported blowout third-quarter earnings on Wednesday, initially lifting chip stocks . The surge was sharp but short-lived. By Friday, selling had resumed across tech globally . The message from the market was clear: a strong earnings report can still spark a rally, but investors are using those rallies to sell, not to buy more .

This pattern — a sharp selloff, a dead-cat bounce on good news, then renewed selling — is the hallmark of a market that has lost conviction in the multiples it previously awarded.

What this reveals about AI valuations and sentiment

The selloff is about price, not fundamentals. Multiple reports from the week explicitly state that the correction was driven by a reassessment of what investors should pay for AI-exposed stocks, not by deteriorating earnings or demand .

• Sky-high valuations are the core driver. Morningstar reported that investors were "balking at sky-high valuations in stocks linked to artificial intelligence" . The Stoxx 600 hit record highs and then fell from them in the same week — a classic sign of topping or rotational behavior .
• Rising cost concerns add pressure. Worries about the enormous capital spending required for AI infrastructure — and whether it will generate proportional returns — became a key overhang . Reports that Apple and Microsoft plan to raise prices also weighed on sentiment .
• Macro fears compound the unease. Expectations of imminent Fed rate hikes to fight persistent inflation provided an additional catalyst for profit-taking across rate-sensitive tech names . Market participants began pricing in 50 basis points in rate increases by year-end, a doubling of forecasts from just two weeks earlier .
• The pattern is fragile, not panicked. The selloff was aggressive but orderly. Strong earnings after Broadcom (early June) and Micron (mid-week) temporarily lifted stocks, but each rally was sold into . As Baird investment strategy analyst Ross Mayfield put it: "The trade has been highly concentrated and flow-driven, which makes it vulnerable to sharp reversals" .

In short: The market is in a valuation reckoning for AI stocks. Strong chip demand and blowout earnings are no longer enough to sustain elevated prices. Investors are demanding proof that massive AI capex will translate into durable, margin-protected profits — and they are punishing the names that can't provide it fast enough.