There was a clear change in mood across world markets on Wednesday as tech stocks experienced sharp declines from record highs, and some stretched valuations.
Until this week, traders had been happy to overlook warnings, rising prices and doubts about whether the most popular companies had justified the surge in their share prices. Now, the drop has forced investors to reflect on whether the gains had gone too far and too fast.
However, even with some large names losing billions in value in a matter of hours, most heavyweight fund managers insisted this was not a full-blown crisis moment, but more of a short wobble after a long winning streak.
Experts still favor AI and tech stocks
Shares across Asia were sold down for the second day in a row and indices in Seoul and Tokyo were roughly 5% below earlier highs logged only on Tuesday morning. Nasdaq futures were also weaker, even after the US benchmark had already fallen 2% the day before.
The names taking the biggest hit were the same stocks that had ridden the boom on the way up. Nvidia, which only a year or two ago was little known outside specialist circles, has since become the most valuable company on the planet due to the AI rush. The company slid nearly 4% on Tuesday, and was around 7% below last month’s top.
Palantir, another strong favourite during the boom, fell almost 8% on the day and then slipped a further 3% in after-hours trade.
Some managers blamed timing, with the year-end window in sight, there is little incentive to let paper gains reverse if the market begins to swing the wrong way. One investor in Hong Kong said this was more about locking in profits than abandoning AI.
Another in Sydney said he was not afraid to step in and buy while others were rushing for the exits, though he admitted he could be wrong.
There was also a warning from South Korea’s exchange on the chipmaker SK Hynix. The statement was routine, but because the firm had already tripled in twelve months, the caution was enough to spark a two-day drop of about 6%.
The market had already been wrestling with a long list of worries in recent weeks: high borrowing costs, stubborn prices in the shops, and trade disputes. However, US markets still climbed by more than 50% from April before the latest fall, showing how strong the momentum behind AI names had become.
Sentiment in Europe softened as well as tech was the weakest part of the main European index, and the German DAX also dipped. The Dutch AEX, where ASML, a key supplier to Nvidia, trades, also slipped.
Some top Wall Street bosses, including the chiefs of Morgan Stanley and Goldman Sachs, have wondered aloud whether stock prices can remain at these heights without further proof of sustained profits. One economist in Europe said conditions in general still looked favourable, but acknowledged valuations had become severe, leaving almost no space for mistakes.
Among the names moving before the US opening bell were AMD and Super Micro Computer, both down more than 4%, while some of the older tech giants held steadier. Meta even managed a small gain.
Chinese markets bucked the trend slightly, lifting in response to news that Beijing would suspend part of its tariffs on US goods for a year.
Safe haven assets firmed as gold rose by almost 1% to sit near $3,963 an ounce and government bonds were also steady, holding yields near 4.09% on US ten-year paper.
Bitcoin, which has swung wildly for months, briefly dipped below $100,000 before bouncing back above that level. Even after the turbulence, no major investor said the AI boom was dead.
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