A sell-off in artificial-intelligence stocks is rattling global markets, cooling one of the hottest trades of the past year.
In the United States, sinking AI shares put Wall Street on track for what LancasterOnline describes as just its second losing week in the last 13. According to CNBC, the S&P 500 actually rose as traders rotated into defensive sectors, but the index still headed for a weekly loss. Micron Technology fell about 5% in premarket trading amid the broader tech rout, CNBC reported.
The pressure spread overseas. WION reported that Asian markets plunged in a sell-off that wiped out billions across South Korea's Kospi, Japan's Nikkei and Hong Kong's Hang Seng, following the Wall Street losses. Multiple outlets framed the decline as traders selling to lock in profits after recent rallies driven by AI enthusiasm.
The mood reflects a debate about whether AI stocks have run too far. Investor Jeremy Grantham warned that the AI boom has pushed U.S. stocks to record highs, according to qz.com.
Nvidia, the chipmaker at the center of the AI trade, drew mixed commentary. Several outlets, including the Motley Fool and Yahoo Finance, argued the stock now looks cheap by historical standards, noting it hasn't traded this inexpensively in seven years and that its market value was just $360 billion at the start of 2023. The Motley Fool highlighted strong demand for Nvidia's Blackwell Ultra GPUs and an upcoming Vera Rubin system. But there are headwinds too: according to The Globe and Mail, CEO Jensen Huang acknowledged that Nvidia's China revenue has fallen to zero, prompting a roughly $20 billion comeback plan.
Why it matters: AI-linked companies now carry enormous weight in major indexes, so when their shares wobble, the swings ripple into the retirement accounts and portfolios of ordinary investors worldwide.