Stock markets around the world experienced a significant sell-off this week, driven by growing investor anxiety over the soaring valuations of companies linked to artificial intelligence. The downturn, which began on Wall Street, quickly spread to financial centers in Asia and Europe, signaling a broad retreat from risk.
In the United States, major indices recorded their steepest single-day declines in nearly a month. The technology-heavy Nasdaq Composite fell by 2%, dragged down by losses across the sector. Notably, all of the so-called “magnificent seven” mega-cap stocks—a group of leading AI and tech firms—closed in the red. The broader S&P 500 index also dropped by over 1%, with particular pressure on data analytics firms.
The market mood was further dampened by prominent investors publicly betting against key AI players. This activity drew sharp criticism from industry leaders, one of whom accused short-sellers of attempting to undermine confidence in the technological shift.
The wave of selling continued into the Asian trading session, where indexes in Japan and South Korea plunged more than 5% from recent record highs, marking the region’s most severe drop in seven months. European markets opened lower, though with more modest declines.
This pullback follows cautious statements from several top banking executives, who have recently warned that a market correction may be imminent after a prolonged rally. Analysts note a rising consensus that equity markets, especially within the tech sector, may have become overheated.
Concerns are mounting that the immense capital flowing into AI development is concentrated among a handful of firms, with questions about the timeline for tangible returns. This reassessment of risk has also impacted other speculative assets; the price of Bitcoin briefly fell below a key psychological threshold as capital shifted away from volatile holdings.
The synchronized global decline highlights how swiftly sentiment can shift, turning previous market euphoria into a cautious reassessment of value and future growth prospects.