Global markets sink as doubts over frothy AI and tech valuations trigger selloff

Global equities retreated Wednesday as the AI-fueled tech trade lost steam, sparking a broad selloff from Asia to Europe and pointing to further weakness on Wall Street. South Korea’s Kospi fell more than 6% at its lows, Japan’s Nikkei dropped about 4.5%, and Hong Kong’s Hang Seng slipped over 1%, with Taiwan down roughly 2.5%. Europe opened lower as the STOXX 600 slid up to 0.7%, the FTSE 100 dipped 0.2% and Germany’s benchmark eased 0.7%. U.S. futures signaled more declines, with S&P 500 contracts off about 0.5% and Nasdaq futures down around 1%.
The reversal followed a sharp U.S. selloff Tuesday that knocked the S&P 500 by 1.1% and the Nasdaq by 2%, led by declines in AI bellwethers. Nvidia shed nearly 4% and Palantir fell almost 8% despite beating estimates. Weak updates from AMD and Super Micro Computer compounded concerns, while SoftBank tumbled over 14% in Tokyo, erasing more than $30 billion in value. Economists highlighted Asia’s heavy exposure to U.S. tech demand, particularly in chips, even as the year-to-date rally leaves the S&P 500 up more than 15% and the Nasdaq over 20%. Recent warnings from the chiefs of Goldman Sachs and Morgan Stanley about potential pullbacks added to caution over stretched AI valuations.

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