US tech stocks experienced a sharp decline on Thursday, with chipmakers and memory companies leading the sell-off. The Nasdaq Composite fell 1.5%, as companies like Sandisk, Western Digital, Seagate, Intel, and Micron saw significant losses. This downturn reflects growing investor skepticism about the high valuations of AI-focused companies and a potential unwinding of leveraged bets.

Strategists note an ongoing "investor deleveraging phase" that could continue to act as a headwind for equities. Despite Taiwan Semiconductor Manufacturing Company reporting a 77% surge in quarterly profits and plans for a $100bn US investment, its shares still dropped. IBM's shares plummeted over 20% following a profit warning tied to customers shifting spending towards AI infrastructure.

Momentum stocks, which have led the market, fell 6% on Thursday, contributing to a broader market pullback. Big Tech companies, including Google and Amazon, also saw declines as questions arise over their substantial borrowing and spending on AI data centers. Geopolitical tensions and rising oil prices, with Brent crude settling at $84.23, add further market uncertainty and inflation concerns.