Global markets tumbled as a severe tech-led rout erased roughly $400 billion from SpaceX's valuation, with the Nasdaq and S&P 500 plunging in sympathy. The sell-off, described by some analysts as unnerving, deepened fears that the artificial intelligence rally may have overshot.
Investors are reassessing the massive capital expenditures tied to AI infrastructure as megacap tech stocks—including those in the semiconductor space—suffered sharp declines. The rout spread from Wall Street to Asian markets, with US stock futures signaling further losses.
SpaceX stock slid below its IPO-day closing price, according to reports, while the broader tech sector faced a potential wipeout. The magnitude of the decline has prompted questions about whether the AI investment thesis remains justified at current valuations.
Market participants now expect heightened volatility as the Federal Reserve's latest policy signals reset rate expectations. Analysts warn that if the AI narrative fractures further, the sell-off could deepen, dragging down indices that have relied heavily on tech gains.
Some strategists argue the correction was overdue, noting that valuations had become detached from fundamental earnings growth. The coming days will test whether this is a healthy pullback or the start of a prolonged downturn.