US equity-index futures declined as enthusiasm for the artificial intelligence trade cooled after driving markets to record highs this year.

Futures contracts for the Nasdaq 100 Index dropped 1.1%, indicating a third day of losses for the gauge as investors rotate out of technology and chip stocks.

Stocks are pulling back from record highs as Broadcom Inc.’s outlook for AI-chip sales fell short of elevated expectations, pausing a blistering advance in semiconductor shares from their war-driven lows. Investors now face a crucial test on Friday with the US jobs report, which could reshape expectations for Federal Reserve policy and determine whether the AI-fueled rally broadens further or loses momentum.

“The rally off the March lows has been an extremely strong one. In fact, it has been parabolic, especially for the chip stocks,” said Matt Maley at Miller Tabak. “Therefore, if the earnings report from Broadcom is the catalyst for a pullback that lasts more than a day or two, it would actually be healthy for the stock market.”