The world’s stock markets fell sharply as fears of an AI-driven bubble gripped investors. After months of relentless gains, the same technology companies that lifted global markets are now pulling them down.
In the United States, both the Nasdaq and the S&P 500 closed lower – by around 2 % and 1 % respectively – as AI-linked companies lost their shine. Nvidia, Meta, and Microsoft were among the day’s biggest drags.
Palantir Technologies slumped almost 8 % following short bets from investor Michael Burry, whose bearish stance revived memories of the 2008 crash. Palantir’s CEO Alex Karp responded by accusing short-sellers of “spreading doubt about the AI revolution.”
Across Asia, Japan’s Nikkei and South Korea’s Kospi suffered losses exceeding 5 %, marking their steepest declines in seven months. European stocks also dropped amid fears that AI valuations have become unsustainable.
Analysts said the pullback reflects growing recognition that most AI spending is concentrated in a handful of firms, while the broader sector struggles to deliver profits. Deutsche Bank noted that a “risk-off” mood had returned to global trading.
Bitcoin also joined the sell-off, falling below $100,000 as risk appetite evaporated. The cryptocurrency’s 3.7 % monthly drop marks its weakest performance in ten years.
Many analysts now believe the coming months could test the resilience of the AI trade. “Every major innovation cycle has its correction,” said one strategist. “This may just be AI’s first real one.”