The global rally in stocks has stalled dramatically, with technology companies leading a worldwide sell-off amid growing fears of an AI-driven valuation bubble. The slump follows warnings from leading bank executives that a market correction may be approaching.
In the United States, the Nasdaq sank nearly 2 %, and the S&P 500 fell by more than 1 %. Tech firms that have been at the center of the AI boom were hit hardest, including Nvidia, Meta, and Microsoft. Analysts described the move as a “wake-up call” for investors.
Palantir Technologies was among the biggest casualties, tumbling almost 8 % even after raising its revenue forecast. The decline followed reports that Michael Burry had placed bets against both Palantir and Nvidia. The famed investor argued that the AI rally was “built on speculative euphoria.”
Bank chiefs at Goldman Sachs and Morgan Stanley joined the chorus of caution, echoing JPMorgan’s Jamie Dimon’s concerns about overvaluation. They warned that investor enthusiasm could quickly fade if growth slows or earnings disappoint.
The sell-off quickly spread to Asia, where Japan’s Nikkei 225 and South Korea’s Kospi dropped more than 5 %. Both markets had recently reached record highs fueled by tech optimism. In Europe, major indices posted smaller but notable declines.
Market strategists suggested that the correction may mark a broader turning point. “AI is real, but the returns are not yet,” one Deutsche Bank analyst said, emphasizing that a handful of companies currently capture nearly all AI-related investment.
Bitcoin and other cryptocurrencies mirrored the weakness, with Bitcoin slipping below $100,000. Its 3.7 % drop in October marks the worst monthly decline for the digital asset in ten years.