Global stock markets are experiencing a sharp decline, raising concerns about the valuation of artificial intelligence (AI) companies. Recent warnings from bank CEOs, including those from Morgan Stanley and Goldman Sachs, suggest a potential market correction after a period of record highs.
In the U.S., the tech-heavy Nasdaq and S&P 500 recorded significant one-day drops, with the Nasdaq falling by 2%. Major AI-related companies, often referred to as the “magnificent seven,” including Nvidia, Amazon, and Apple, saw losses. Even Palantir, a data analytics firm, dropped nearly 8% despite raising its revenue forecast.
Michael Burry, a well-known investor who predicted the 2008 financial crisis, has bet against both Palantir and Nvidia. His actions have raised concerns and prompted a sell-off of these AI stocks. Palantir’s CEO, Alex Karp, criticized Burry for questioning the AI revolution during a recent CNBC interview.
Asian markets followed the U.S. lead, marking the steepest decline in seven months. Japan and South Korea’s indices fell more than 5%. Meanwhile, European markets also experienced slight decreases.
Jim Reid, an analyst at Deutsche Bank, noted that concerns over high tech valuations are increasing. He explained that investor sentiment has shifted due to fears about the sustainability of these valuations. Recent data shows that a majority of AI investments are concentrated in a few companies, like OpenAI and Nvidia, with minimal returns so far.
Bitcoin faced its own challenges, dipping below $100,000 for the first time since June. After hitting an all-time high of over $126,000 in early October, it recorded its worst monthly performance in a decade, dropping 3.7%.
Social media reactions have been mixed, with some investors expressing concern over the volatility of tech stocks and questioning the growth potential of AI companies. Overall, the market seems to be recalibrating, highlighting the uncertainty surrounding tech investments.
For those interested in deeper insights, you can explore more about market trends and projections in reports from financial institutions like Goldman Sachs.
