Global stock markets have retreated sharply as investors grow uneasy about the sustainability of the artificial intelligence (AI) boom that has powered much of this year’s gains. A series of warnings from major bank executives has reignited fears of an impending correction in overheated markets.
In the United States, the tech-heavy Nasdaq dropped nearly 2 %, while the S&P 500 slid just over 1 %. These losses mark one of the sharpest daily declines in weeks, with the sell-off concentrated in big technology firms that have driven the AI rally.
The “Magnificent Seven” – Nvidia, Tesla, Microsoft, Apple, Alphabet, Amazon, and Meta – all saw losses for the day. Nvidia, once hailed as the backbone of the AI revolution, has faced increasing skepticism about whether its rapid growth can continue at the same pace.
Adding to the unease was the steep decline in Palantir Technologies, which slumped nearly 8 % despite upgrading its revenue outlook. The move followed reports that investor Michael Burry, famed for predicting the 2008 financial crash, had taken short positions against Palantir and Nvidia.
Bank leaders from Goldman Sachs, Morgan Stanley, and JPMorgan have each cautioned in recent days that markets could face turbulence if valuations remain stretched. JPMorgan’s Jamie Dimon repeated his earlier concern that “a crash is possible within the next two years” as speculative activity intensifies.
Asian markets were quick to follow the American downturn. Japan’s Nikkei 225 and South Korea’s Kospi both fell more than 5 % from their record highs, erasing much of the previous month’s gains. In Europe, indices in the UK, Germany, and France opened lower on the back of global risk aversion.
Analysts say the wave of selling highlights how dependent markets have become on AI-related optimism. With investment heavily concentrated in a small group of tech leaders, any sign of slowdown can quickly shake confidence.
Bitcoin also came under pressure, briefly dipping below $100,000 as traders offloaded risk assets. The cryptocurrency’s monthly losses are now its worst in a decade, underscoring the shift to safer investments.