Global stock markets faced a sharp sell-off on Tuesday, as a wave of selling targeting technology and semiconductor stocks prompted investors to reassess market assumptions. Nigel Green, from global financial advisory giant deVere Group, provided a bearish analysis as the sell-off impacted regions from Asia to Europe and US futures. deVere Group provides financial advice to clients worldwide, offering services including investment management and wealth planning. South Korea’s tech-heavy Kospi index plunged 10%, with Samsung Electronics and SK Hynix notably dropping over 12%. European markets saw the pan-European Stoxx 600 fall 1.2% and its Technology index tumble 3.2%. In the US, Nasdaq 100 futures dipped 2.7% pre-market, with Intel, Micron, AMD, and Nvidia experiencing significant drops.
This market weakness follows a rotation away from prominent tech companies. Green commented that “markets are getting a cold shower,” as investors increasingly question whether the significant capital committed to AI infrastructure will generate sufficient earnings to justify current valuations. For the past two years, investors were largely willing to pay high prices for AI-driven growth potential. Now, with major tech firms committing hundreds of billions to AI-related spending, Green noted investors are becoming more demanding, seeking clear evidence that unprecedented spending will translate into unprecedented profits.
The market reaction, Green argued, extends beyond just AI, challenging a range of assumptions that have underpinned valuations, including beliefs about sustained growth, smooth rate cuts, and rapid AI earnings transformation. “That’s a whole load of optimism built into share prices,” he remarked. The sell-off also reflects investors revisiting risks, as economic growth slows in some areas. Sharp declines in semiconductor stocks are particularly telling, given their central role in the AI story. Green added that the speed of the sell-off reflects the AI trade becoming highly crowded. He concluded it’s “a reality check” where earnings and valuations still matter, ultimately healthy for the market.
