US AI stock sell-off shakes markets from Wall Street to Asia

A sell-off in technology shares pulled U.S. and Asian markets lower Tuesday, as investor focus pivoted from the U.S. war with Iran to the durability of the artificial-intelligence spending boom that has driven indices to record highs. The Nasdaq composite closed 2.2% lower, while the S&P 500 dropped 1.43% by Tuesday afternoon. The Dow Jones Industrial Average held steady [1]. The declines came despite all three major U.S. indices having reached record levels earlier this year, buoyed by a flood of capital into AI infrastructure. The Nasdaq remains up 10% for the year, the S&P 500 has gained 7.3%, and the Dow has added 6%, breaching 51,000 points [1].\n\nThe reversal was triggered by a series of events on Monday. Shares of Google-parent Alphabet had their worst session in more than a year, falling 5% after two high-profile AI researchers departed the company [1]. Alphabet, created through a 2015 restructuring of Google, is a component of both the S&P 500 and the Nasdaq-100 [9]. Separately, Elon Musk's SpaceX, which completed its initial public offering on 12 June, tumbled 16% on Monday after the company announced plans to raise $20 billion through a bond sale [1]. The move rattled investors because SpaceX had already secured more than $85 billion in its IPO [1].\n\nIpek Ozkardeskaya, a senior analyst at Swissquote, said the bond sale revives concerns that large technology firms are spending too heavily on AI and increasingly financing that spending with debt. Ozkardeskaya noted that Morgan Stanley has estimated AI-related borrowing will surpass $500 billion this year [1]. Morgan Stanley, the multinational investment bank, ranks among the largest U.S. corporations by revenue [7].\n\nThe anxiety spread to Asia after the U.S. close. South Korea's benchmark index closed 10% lower on Tuesday, as the country's largest chipmakers, SK Hynix and Samsung Electronics, each fell more than 12%. Japan's Nikkei 225 ended the day down 3.5% [1]. The sell-off was contained in some regions; London's FTSE 100 was steady at the close [1].\n\nThe market moves unfolded against the backdrop of the 2026 Iran war, which the International Energy Agency has called the largest supply disruption in the history of the global oil market [2]. The conflict closed the Strait of Hormuz on 4 March, stranding oil and liquefied natural gas exports and pushing Brent crude past $120 per barrel [2]. The disruption has triggered currency volatility, inflation, and heightened risks of stagflation, leading to expectations that interest rate cuts would be postponed or reversed [2]. Last week, the Federal Reserve signaled it may raise rates to combat rising inflation, adding to pressure on growth stocks [1].\n\nEconomists have warned that the concentration of market value in a handful of technology companies echoes the dot-com era. Seven tech firms now account for 30% of the S&P 500's total value [1].