Global stock markets experienced a widespread sell-off in technology shares this week, driven by mounting concerns over elevated valuations of artificial intelligence (AI) companies and semiconductor manufacturers, alongside fears of rising U.S. interest rates. The sell-off, which began in Asia-Pacific markets, extended through Europe and the United States, reflecting investor unease about the timing and returns of extensive AI-related capital expenditures.

On Wall Street, the Nasdaq Composite declined by approximately 1.5% on Tuesday afternoon, after a 1.3% drop the previous day, while the S&P 500 fell around 1 to 1.4%. The broader Dow Jones Industrial Average was relatively stable, losing about 0.1%. Chipmakers, which have been among the most prominent beneficiaries of the recent AI-driven rally, suffered particularly heavy losses. Micron Technology shares plunged over 10%, Qualcomm declined by more than 8%, and Nvidia’s stock dropped between 3% and 4%. The decline pushed Nvidia’s market capitalization below the $5 trillion mark. Other semiconductor companies, including SanDisk and prominent European manufacturers such as ASML, Infineon, and STMicroelectronics, recorded significant decreases, with ASML declining more than 5% in Amsterdam.

The rout extended notably to South Korea, which had one of the best-performing stock markets globally since early 2025. The KOSPI index plunged by more than 10%, prompting a temporary 20-minute trading halt. This drop was led by double-digit falls in shares of Samsung Electronics and SK Hynix, major memory chip producers whose products are integral to AI systems. Both companies’ shares have more than doubled in value this year prior to the sell-off. Japanese, Taiwanese, and Hong Kong markets also posted declines exceeding 1 to 3.5%.

The sell-off follows a Bank of America report anticipating three additional interest rate hikes by the Federal Reserve this year to combat inflation. Higher interest rates often weigh on technology stocks, which are valued based on future earnings growth. Analysts noted that this situation represents a "double whammy" of economic concerns: skepticism about the profitability of AI spending coinciding with expectations of tighter monetary policy.

Among major technology firms, Alphabet, Amazon, and Meta are planning to invest hundreds of billions of dollars over the next five years in building data centers to support AI applications developed by companies such as Anthropic and OpenAI. Investor apprehension has mounted amid questions over when these massive expenditures will yield concrete financial returns, compounded by reports of high pricing from AI service providers. Some market strategists described a shift toward selling “spenders,” or companies heavily investing in infrastructure without near-term profits.

SpaceX’s stock, after a dramatic decline following its recent IPO and a $25 billion bond offering, stabilized slightly on Tuesday but remains down approximately 20% over the past week. The company’s high-cost borrowing reflects investor caution regarding CEO Elon Musk’s ambitious plans for space-based data centers.

Market commentators have highlighted parallels between the current tech market dynamics and the late 1990s dot-com bubble, invoking concerns about potential volatility and overvaluation in AI-driven stocks. However, some analysts contend that strong profit growth in AI sectors has so far prevented imbalances similar to those seen during past tech booms. Nonetheless, with geopolitical risks and oil prices also in flux, the evolving economic environment continues to challenge investor confidence across global equity markets.