International markets slid while the week started as concerns grew that AI and tech firms were overvalued. This sell-off started in Asia and spread globally.
For example, South Korea’s Kospi Index slid by at least 6% on Tuesday while the Nikkei in Japan lost approximately 4.5%. The Hang Seng Index in Hong Kong slid by at least 1%, and Taiwanese stocks plunged by about 2.5%. This tumble comes barely a week after the Kospi Index was buoyed by AI stocks to climb to a record level.
As Wednesday trading got underway in Asia, stocks experienced a nightmare as shares of Samsung, an electronics giant, slid by 5.5% while SK Hynix, a chipmaker, saw its shares fall by 6%.
In the U.S., significant selling was witnessed in leading tech stocks on Tuesday. This selling halted the recent uptick in global stocks. At the end of Tuesday, the S&P 500 lost 1.1%, the Nasdaq slid by 2% while the Russell 2000 surrendered 1.8%.
This selloff didn’t spare the leading tech stocks. On Tuesday, Nvidia saw almost 4% wiped from its market cap. Another major AI stock, Palantir, slid by 8% by the end of the trading day. This came despite the firm exceeding the quarterly earnings forecast by Wall Street.
The market correction comes in the wake of warnings by the chief executives at Morgan Stanley and Goldman Sachs saying on Monday afternoon that there was a possible pullback round the corner. The next day, notable tech firms Super Micro Computers and AMD released earnings reports that were lukewarm. These companies make chips used in the AI industry.
For several months, appetite for AI stocks has been high as many tech giants like Microsoft, Amazon and OpenAI announced eye-popping deals with each other. These megadeals have raised concerns about how sustainable the AI industry was given that major firms were injecting cash into one another. Questions arose about where that money was coming from given that many of those companies have so far been unable to monetize their innovations.
Overall, U.S. stocks have registered a remarkable uptick in 2025. Thus far in the year, the S&P 500 has gained at least 15% while the Nasdaq Composite that heavily leans towards the biggest technology stocks is up by 20% in 2025. The next few weeks and months will reveal whether individual tech stocks like Apple Inc. (NASDAQ: AAPL) can hold onto the gains they have registered in recent months.
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