Global shares fell to their lowest level in a month on Tuesday as a sharp selloff in semiconductor stocks spread across Asia and weighed on markets in Europe and the United States.
The decline reflects a fast change in investor sentiment around artificial intelligence. The technology remains central to corporate spending plans, but markets are increasingly questioning whether current valuations, debt-funded expansion and projected profits can all be sustained.
Asian chip shares lead the retreat
South Korea’s KOSPI dropped more than 10% and triggered a circuit breaker, according to Reuters. The index had more than tripled in the year to June before losing over a third from its peak. Major memory-chip producers also recorded steep declines as investors reassessed competition and leverage across the sector.
The broader MSCI world equity index fell 0.6% to its lowest point since late June. Nasdaq futures were also lower ahead of a major week of earnings from large U.S. technology companies.
Why AI spending is under scrutiny
Investors have rewarded companies linked to data centres, chips and artificial intelligence infrastructure. That trade is now being tested by the enormous financing required to build new computing capacity and uncertainty about how quickly the investment will generate returns.
Reports of progress by Chinese chipmakers and domestic semiconductor-equipment producers have added another concern: stronger competition could make it harder for established manufacturers to maintain exceptional margins and growth rates.
Interest rates add pressure
Markets are also watching the U.S. Federal Reserve. Reuters reported that pricing implied roughly a 36% probability of a quarter-point rate increase at Wednesday’s decision. Higher borrowing costs can weigh most heavily on highly valued growth companies and leveraged investments.
Oil prices moved in the opposite direction, extending their decline after a pause in U.S.-Iran attacks reduced immediate fears about supply disruption. Brent crude fell below $87 a barrel, easing one source of inflation pressure even as rate uncertainty remained.
What to watch next
Earnings and spending guidance from Microsoft, Amazon, Meta and Apple will offer the next major test. Investors will be looking for evidence that AI investment is producing revenue and for any sign that financing commitments are straining cash flow.
The selloff does not by itself mark the end of the AI expansion. It does show that markets are demanding clearer proof that record investment can produce durable returns.
Source: Reuters. Original Scandle Wire summary and analysis.
