Global Tech Stocks Face Sharp Weekly Decline as AI Market Rally Loses Steam

Global tech-heavy stock markets are heading for their steepest weekly declines in seven months, as investors grow increasingly cautious about the soaring valuations of artificial intelligence (AI) stocks. The recent market pullback has sparked a shift toward safer assets such as bonds and the yen.

While S&P 500 and Nasdaq 100 futures showed slight gains in early Asian trading, the Nasdaq Composite fell 1.9% overnight. The index has dropped 2.8% this week—its biggest fall since March—marking a pause in the AI-fueled rally that lifted it over 50% since April’s tariff-driven lows. Japan’s Nikkei slipped 1.8% in morning trade, heading for a 4.7% weekly decline, while South Korea’s Kospi fell 1.4%, marking its worst week since March. Tech investor SoftBank Group tumbled more than 20% this week, and Bitcoin, often seen as a proxy for tech sentiment, dropped 8% to $101,092.

The downturn lacks a single trigger, but growing fears of an AI stock bubble and concerns about profitability are weighing on sentiment. Meta’s recent share drop—following announcements of hefty AI infrastructure spending—and Palantir’s decline despite strong earnings exemplify investor unease. According to HSBC’s head of equity strategy, Herald van der Linde, market corrections often start as gradual shifts, as investors begin taking profits once others follow suit.

Amid the selloff, bond markets rallied as investors sought safety. U.S. Treasury yields dropped, with 10-year yields falling 6.4 basis points to 4.09%, aided by data showing increased U.S. job cuts in October. The dollar weakened to $1.1546 per euro and 153.17 yen, while sterling held at $1.3128 after the Bank of England kept rates steady. Gold remained firm near $4,000 per ounce, and Brent crude hovered at $63.64 a barrel.