Markets Get 'Cold Shower' As Tech Rout Forces Reality Check
Global stock markets sold off sharply on Tuesday as a wave of selling swept through tech and semiconductor stocks, prompting investors to reassess some of the assumptions that have driven markets higher over the last two years.
This is the bearish analysis from Nigel Green of global financial advisory giant deVere Group as the sell-off stretched from Asia to Europe and Wall Street futures, with South Korea's tech-heavy Kospi index plunging 10%, dragged lower by losses of more than 12% in both Samsung Electronics and SK Hynix.
AdvertisementEuropean markets followed suit. The pan-European Stoxx 600 fell 1.2% in early trading, while the Stoxx 600 Technology index tumbled 3.2%. Semiconductor stocks were among the hardest hit, with STMicroelectronics and Dutch chip equipment maker ASMI both falling more than 7%.
In the US, futures linked to the Nasdaq 100 dropped 2.7% ahead of the opening bell. Semiconductor stocks came under intense pressure, with Intel down 7.8% in pre-market trading, Micron falling 8.4%, AMD dropping 6%, and Nvidia losing 3%.
SpaceX extended its dramatic decline, falling a further 3.6% in pre-market trading after suffering a 16% slide during Monday's session.
The weakness follows a sharp rotation out of the so-called Magnificent Seven stocks, with Amazon and Meta continuing their declines in pre-market trading.
Nigel Green comments:
The sell-off comes as investors increasingly question whether the enormous sums being committed to AI infrastructure will generate sufficient earnings growth to justify current valuations.
Major tech companies have committed hundreds of billions of dollars to AI-related spending, from data centres and chips to software and cloud infrastructure.
Nigel Green says:
He stresses that the market reaction goes beyond AI itself.
The current move reflects investors revisiting risks that many had largely pushed aside.
He argues the sharp losses across semiconductor stocks are particularly revealing.
The deVere CEO says the speed of the sell-off reflects how crowded the trade had become.
Despite the sharp declines, he does not believe markets are entering crisis territory.
He concludes:
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