Global stock markets have experienced sharp declines as concerns grow that the artificial intelligence (AI) boom may be cooling. The US, Asian, and European markets all fell after bank bosses warned of a potential market correction following a period of record highs that left some companies appearing overvalued.
In the US, the tech-focused Nasdaq closed 2% down on Tuesday, its largest one-day percentage drop in nearly a month, while the S&P 500 fell just over 1%. All of the 'magnificent seven' AI-related stocks—Nvidia, Amazon, Apple, Microsoft, Tesla, Alphabet, and Meta—saw declines. Palantir, a data analytics firm, slumped almost 8% despite raising its revenue outlook.
The sell-off was exacerbated by investor Michael Burry, known for predicting the 2008 financial crash, who placed bets against Palantir and Nvidia. Palantir's CEO, Alex Karp, criticised short-sellers for 'trying to call the AI revolution into question'.
Asian markets followed the US lead on Wednesday, recording their sharpest slide in seven months, with Japan and South Korea dropping over 5% from recent record highs. European markets in the UK, France, and Germany also fell slightly.
The chief executives of Morgan Stanley and Goldman Sachs joined JP Morgan's Jamie Dimon in cautioning that a market correction could be imminent. Deutsche Bank analyst Jim Reid noted a 'growing chorus' discussing the possibility of an equity correction, adding that 'concerns over lofty tech valuations have hit investor sentiment'.
Bitcoin also dipped below $100,000 for the first time since June as investors retreated from riskier assets. The cryptocurrency had reached a record high of over $126,000 in early October but fell 3.7% during the month, its worst monthly performance in a decade.
