Stocks Slide as Wall Street Gets AI Wake-Up Call: Markets Wrap
(Bloomberg) — Wall Street got a reality check as a bruising selloff in several technology giants fueled concern the artificial-intelligence frenzy that has powered the equity bull market might be overblown.
The tech rout engulfed global stocks as worries about frothy valuations ignited a fresh bout of volatility after a nearly three-month surge in riskier assets. The Nasdaq 100 sank 2.5%. A key gauge of chipmakers tumbled 7% after more than doubling from war-driven lows. Losses were more pronounced in Asia, with South Korea’s Kospi plunging 10% from a record. SpaceX bounced after briefly falling below its debut’s open price.
In a rush for safety, Treasuries rose while haven currencies including the Japanese yen and the Swiss franc outperformed major counterparts. Conversely, Bitcoin slumped 3%. Oil fell, with tankers becoming more overt in transiting the Strait of Hormuz following a peace deal between Iran and the US.
Tuesday’s pullback comes as the equity market prepares to close out the first half of the year with some blockbuster gains that had been driven by easing geopolitical tensions, solid earnings and an AI trade revival. But the tech rally has recently faltered on concerns over whether the billions of dollars spent by giant firms will be justified.
“The risk-off trade reflects fear AI exuberance may be overdone,” said Chris Low at FHN Financial.
While warnings about tech euphoria aren’t new, the latest slide was triggered by a session of amplified swings in the world’s best‑performing market this year. What started as a modest risk-off session in South Korea, morphed into a plunge that saw foreign investors offloading more than $2.5 billion of Kospi shares.
Market watchers cited a combination of forced liquidation hitting retail investors trading on borrowed money, compounded by a wave of selling tied to leveraged exchange-traded funds tracking SK Hynix Inc. and Samsung Electronics Co.
“It’s going to take quite a bit more weakness in the US market than we’re already seeing to raise any serious warning flags,” said Matt Maley at Miller Tabak. “However, given the level of leverage in South Korea and around the world, investors should guard against being overly complacent about these new developments.”
Attention will soon shift to Micron Technology Inc.’s quarterly results on Wednesday, which are expected to provide the clearest test yet of whether demand for AI infrastructure remains strong enough to sustain this year’s rally. While the chipmaker led industry losses on Tuesday, it was still up nearly 300% in 2026.
Technology giants will return to investor favor following a selloff that has dragged down some of the sector’s biggest names in recent weeks, Evercore ISI’s Julian Emanuel said.
“You’re gonna see good earnings,” Emanuel told Bloomberg Television’s Surveillance. The results will be “the proof of the pudding” again after driving a “furious rally” in April and May.
Corporate Highlights:
Qualcomm Inc. is in advanced talks to acquire Modular Inc. in a transaction valuing the AI infrastructure software company at about $4 billion, according to people familiar with the matter. Oracle Corp. reduced its workforce by 21,000 employees in the past 12 months, a wider scale than previously known, including those whose jobs were eliminated by the use of artificial intelligence. Goldman Sachs Group Inc. equity traders are on the cusp of setting another record in the second quarter, with that business on track to generate more than $5 billion of revenue, according to people familiar with the matter. Constellation Energy Corp., the biggest US supplier of nuclear energy, agreed to provide electricity from an Illinois site to Walmart Inc. through a long-term deal that will fund upgrades at the power plant. Pfizer Inc. said an experimental drug failed to improve survival in patients with an advanced form of lung cancer that couldn’t be treated with surgery, dealing a setback to the closely watched medicine. Some of the main moves on markets:
Stocks
The S&P 500 fell 0.9% as of 10:40 a.m. New York time The Nasdaq 100 fell 2.5% The Dow Jones Industrial Average was little changed The Stoxx Europe 600 fell 0.6% The MSCI World Index fell 1% Currencies
The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.5% to $1.1377 The British pound fell 0.4% to $1.3198 The Japanese yen was unchanged at 161.57 per dollar Cryptocurrencies
Bitcoin fell 2.9% to $62,494.02 Ether fell 4% to $1,663.05 Bonds
The yield on 10-year Treasuries declined two basis points to 4.48% Germany’s 10-year yield declined four basis points to 2.91% Britain’s 10-year yield declined five basis points to 4.76% Commodities
West Texas Intermediate crude fell 0.9% to $73.21 a barrel Spot gold fell 1.6% to $4,124.24 an ounce ©2026 Bloomberg L.P.
