Global stock markets tumbled this week as investors began to question whether the spectacular rise in artificial intelligence (AI) valuations had gone too far. The sell-off, which began in the United States, quickly rippled across Asia and Europe, wiping billions off company values.
In the US, the Nasdaq Composite slid around 2 %, marking one of its steepest one-day losses in nearly a month. The S&P 500 followed suit, closing down just over 1 %. Both indices were dragged lower by heavy losses among major tech players that had driven the AI rally.
The so-called “Magnificent Seven” – Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla – all recorded notable declines. Nvidia, a central player in the AI boom, fell sharply amid renewed skepticism about its sky-high valuation.
The downturn followed warnings from leading bank executives, including those at Morgan Stanley, Goldman Sachs and JPMorgan Chase, that markets could soon face a correction after months of record highs. Analysts said these remarks triggered a “risk-off” wave, as traders opted to take profits from overextended tech holdings.
In Asia, the reaction was swift. Japan’s Nikkei 225 and South Korea’s Kospi both plunged more than 5 % from recent record highs, marking their steepest slides in months. European stocks, including those in London, Paris and Frankfurt, opened lower as investor sentiment weakened globally.
Analysts at Deutsche Bank noted that a growing number of voices were warning of an “equity correction” as inflated AI valuations begin to look unsustainable. Some experts also pointed out that most AI investment is funneled into a small cluster of companies, leaving the broader tech landscape thinly supported.
Even cryptocurrencies were not spared. Bitcoin briefly dipped below $100,000 for the first time since June, as investors fled riskier assets. The world’s largest cryptocurrency has now suffered its worst monthly performance in a decade, according to market data.