Global markets slumped sharply after months of AI-fueled gains, as investors reassessed the sustainability of sky-high valuations in technology stocks. The downturn comes amid stark warnings from leading financial executives that the market could be due for a correction.
US equities were the first to tumble. The Nasdaq fell by about 2 %, while the S&P 500 lost more than 1 %, both weighed down by losses in the largest AI-linked firms. Nvidia, Microsoft, and Meta each saw declines, dragging major indices lower.
Palantir Technologies suffered an especially heavy blow, falling almost 8 %. The data firm has been the focus of renewed attention since investor Michael Burry revealed he was betting against it, calling current valuations “unjustifiable.”
The selling quickly spread eastward. Japan’s Nikkei and South Korea’s Kospi each fell more than 5 % from record highs. European markets, including those in London, Paris, and Frankfurt, also slipped as traders pulled money out of riskier sectors.
Experts say the pullback reflects a broader shift in sentiment. “AI stocks have been priced for perfection, and investors are now realizing that expectations may be too high,” said one strategist.
Despite strong revenue growth projections, most AI companies have yet to deliver profits that justify their lofty market caps. The narrow concentration of capital in a few mega-caps adds to the fragility of the rally.
Even the crypto market was not spared. Bitcoin briefly dropped below $100,000, marking a steep retreat from its record high in October. The move highlights growing investor caution toward speculative assets.