A brutal global sell-off in technology and artificial intelligence stocks rattled financial markets on Tuesday, with the rout spreading from Asia to Europe and the U.S. and dragging cryptocurrencies lower. Bitcoin dropped more than 3% to $62,479.80 as risk appetite soured, while the broader crypto market failed to find support even as geopolitical tensions eased.
The selling was triggered by escalating fears over stretched AI valuations and a sudden repricing of Federal Reserve interest-rate expectations. Traders now price in 50 basis points of rate hikes by December—double the amount expected just two weeks ago—according to CME’s FedWatch Tool. Higher borrowing costs threaten the massive capital spending that has fueled the AI boom, calling into question whether the sector’s lofty valuations can be sustained.
The damage began in South Korea, where memory-chip giants Samsung Electronics and SK Hynix plunged more than 12%, dragging the Kospi index down 10% and triggering a 20-minute trading halt. Japan’s Nikkei 225 fell 3.55%, ending an eight-session winning streak. European chipmakers also suffered deep losses: ASML, the continent’s most valuable tech company, dropped more than 5% and shed roughly $38 billion in market value within the first two hours of trading, while Infineon, ASM International, and STMicroelectronics each lost between 5% and 8%. The Stoxx 600 Technology index slid 3.2%.
In the U.S., pre-market trading pointed to another heavy session. Nvidia fell more than 2.6%, Intel slid over 7%, AMD lost 6%, and Micron tumbled 8% ahead of its quarterly earnings report. The iShares Semiconductor ETF fell close to 5.9%, Nasdaq 100 futures sank 2.8%, and S&P 500 futures dropped 1.4%. SpaceX shares, which had already cratered 16.4% on Monday after announcing a major bond sale, extended losses by more than 4% in pre-market, amplifying concerns that private tech valuations may have run too far.
Analysts described the pullback as a necessary reset rather than a catastrophic breakdown. Wedbush’s Dan Ives called the AI trade still in the “3rd inning” and suggested the sell-off could be a buying opportunity. Strategy Asset Managers CEO Tom Hulick pointed to abundant liquidity and strong earnings momentum. However, Swissquote’s Ipek Ozkardeskaya warned that Morgan Stanley expects global AI-related borrowing to exceed half a trillion dollars this year, making corporate bond markets deeply reliant on AI-themed debt—a risk that unnerved investors.
Bitcoin’s 3% decline underscored how the digital asset remains tethered to broader risk sentiment, even as traditional safe havens were mixed. Gold fell 1.47% due to a stronger U.S. dollar and rising rate expectations, while oil prices retreated on hopes of a diplomatic breakthrough between the U.S. and Iran. The cryptocurrency’s ongoing consolidation within a tight range now faces fresh headwinds from a macro environment that is turning decidedly less accommodative.
