Global stock markets have fallen sharply amid concerns that a boom in valuations of artificial intelligence (AI) companies could be rapidly cooling.
Markets in the US, Asia and Europe have fallen after bank bosses warned a serious stock market correction could lie ahead, after a run of record stock market highs led some companies to appear overvalued.
In the US, the tech-focused Nasdaq and the S&P 500 on Tuesday suffered their largest one-day percentage drop in almost a month.
Technology shares pulled the Nasdaq lower, which resulted in it closing 2% down. Meanwhile, there were one-day falls for all of the “magnificent seven” AI-related stocks, including the chipmaker Nvidia, Amazon, Apple, Microsoft, Tesla, Alphabet (the owner of Google) and Meta (the owner of Facebook, Instagram and WhatsApp).
The S&P also closed down just over 1% as it lost ground because of tech stocks, particularly the data analytics company Palantir, which slumped by almost 8% despite having raised its revenue outlook the previous day.
Palantir has also been targeted by a well-known short-seller – who bets on falls in the value of a company.
The investor Michael Burry – who rose to prominence after predicting the 2008 financial crash and inspiring the film The Big Short – bet against Palantir and the chipmaker Nvidia, two of the biggest AI companies, sparking criticism from Palantir’s boss and a stock sell-off.
In an interview on CNBC, Alex Karp, Palantir’s chief executive, criticised Burry and other short-sellers for “trying to call the AI revolution into question”.
Asian markets followed the US falls on Wednesday, recording the sharpest slide in seven months, as the concerns about tech stocks spread, and indices in Japan and South Korea dropped more than 5% from the record highs reached the previous day. In Europe, markets in the UK, France and Germany dropped slightly on Wednesday morning.
The market falls came as the chief executives of Morgan Stanley and Goldman Sachs cautioned there could be a market correction ahead.
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