Financial markets jolted on Tuesday as a wave of selling hit major technology shares, raising doubts about the sustainability of the AI boom.
The Nasdaq fell about 2%, and chipmakers dropped in tandem, reviving concerns that the three‑month rally had left valuations overextended.
SpaceX, which went public on June 12, also suffered a volatile session. Its stock dipped below its $150 offering price before rebounding near $160.
Months of optimism had pushed indices to record highs, creating a 90‑day rally that left many tech stocks looking inflated.
Tuesday’s sell‑off reflects growing scrutiny over whether corporate AI adoption can justify current price tags.
Semiconductor firms such as Nvidia and Intel were hit hardest, dragging the sector’s primary index lower.
After more than doubling since 2022 lows, the tech sector’s rapid expansion suggests investors may have over‑funded AI‑related hardware.
The mood quickly spilled into other high‑profile assets, with Elon Musk’s aerospace firm mirroring the broader tech weakness.
SpaceX’s volatile trading underscores how newly listed companies can suffer when tech sentiment sours.
The stock fell below its $150 opening price before a modest rebound to the $160 level, interpreted by some as a sign of underlying demand for the commercial space sector.
Optimists view the bounce as a healthy correction, while sceptics cite the wide price swings as evidence of excessive speculation.
Market analysts are divided: some see the sell‑off as a temporary pause, others fear it could mark the start of a larger retreat.
Bank of America’s Vivek Arya argued that sticky inflation and strong demand will keep sector forecasts high, noting a shift from ROI defence to addressing infrastructure and power constraints.
Skeptics counter that cooling IT budgets and broader economic pressures signal the end of easy gains, with AJ Bell’s Danni Hewson noting that the FTSE 100 held steady due to limited UK exposure to tech stocks.
Looking ahead, Wall Street will watch upcoming earnings as tech giants must prove their AI investments generate real profits.
