The latest
Investors are pulling back from AI-linked stocks after a bruising start to the week for global technology markets.
The sell-off began in the U.S., moved through Asia and then resumed on Wall Street. The message from the market is getting clearer: enthusiasm for AI remains strong, but it is no longer enough on its own to justify high valuations and huge capital spending plans.
Details
• In South Korea, SK Hynix and Samsung fell more than 12%, helping drag the Korean market index down about 10%.
• The Magnificent Seven stocks ended down 1.5% as a group, with only Microsoft and Amazon posting gains.
• U.S.-listed AI and chip names also came under pressure, including Broadcom, Micron, AMD, Intel and Marvell.
• Google fell 5%, while SpaceX dropped 16%. Some analysts saw those losses as enough to trigger a broader sector sell-off.
• Interest rates are another concern. Most forecasters expect the Federal Reserve to raise rates by at least a quarter-point this year.
• Bank of America projected three rate increases in 2026, totaling three-quarters of a point.
• Higher rates could slow the huge investment plans that tech companies have built around AI infrastructure.
• Investors are now asking the harder question: will the hundreds of billions being poured into AI turn into real profits, or has the market priced in too much future growth?
What to watch
Micron’s earnings will be the next major test.
The chipmaker is expected to offer a clearer read on whether demand for AI infrastructure remains strong, or whether the market’s anxiety will keep spreading.
Strong numbers could calm the sell-off. Weak guidance could turn this from a short correction into a deeper test of the AI trade.
Source: Morning Brew.
