By Marcus Webb | June 3, 2026
The AI trade that has dominated markets for months took a breather on Wednesday as surging oil prices and escalating Middle East tensions triggered a sharp rotation out of growth stocks and into energy and value names. The Nasdaq Composite fell 1.1%, underperforming the S&P 500’s 0.7% decline and the Dow’s 0.5% drop.
Nvidia slipped 1.8%, AMD lost 2.1%, and Broadcom gave back 1.5%. The Philadelphia Semiconductor Index dropped 1.4%. Nothing catastrophic on its own, but the pattern was unmistakable: money was rotating out of tech at a pace not seen since January.
The rotation was most visible in the options market. Call volume on the XLE energy ETF surged to 2.3 times its 20-day average, while QQQ put activity picked up sharply. Institutional flow, not retail — the block trades on XLE calls were well above typical retail size.
The question for tech investors is whether this is a one-day blip or the start of a deeper rotation. Oil at $100 changes the macro calculus. Higher energy costs eat into corporate margins, particularly for data-center operators whose electricity bills are already under pressure. Every $10 increase in crude adds roughly $6 billion in annual energy costs for the top five hyperscale cloud operators.
